EDITORIAL
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EDITORIAL: Formal and Tacit Innovation Acting without knowing
T
here is a much-loved story told in a Mol...
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EDITORIAL
1
EDITORIAL: Formal and Tacit Innovation Acting without knowing
T
here is a much-loved story told in a Molie`re play of a character who discovers to his delight that although not a poet, he has been speaking prose all his life. The anecdote may have some relevance to innovation studies. Might it be, that innovation is going on, unregarded, and unstudied, in many corners of each organisation? The suggestion indicates that there may be benefit to be gained from considering the wider set of activities, rather than concentrating on the more explicit innovation structures and strategies. Support for the idea comes from the currently hot topic of knowledge acquisition. Readers will have become familiar with the notion of tacit knowledge. Before the term became popular, applied decision theorists were well aware of the phenomenon of the professional who acts decisively, and yet is unable to explain the grounds for his or her actions. There are probably other forces at work when managers are quizzed about the innovativeness of their organisation. Your editor has evidence of something of a paradox. Executives from relatively stable and slowchanging organisations tend to regard their practices as rather innovative. Executives from more unstable and faster-changing organisations are more inclined to play down their innovative achievements. The paradox came to light during a workshop with a group of technical managers who were outraged to discover that on average they had rated their organisation lower than a group from a wellknown retain food chain. Perhaps the technical group were benchmarking themselves against technological innovators, and the retailers against other retailers. The difficulties in constructing generalisations about innovation remain.
Contents of this issue In this issue we have accounts of innovation, some at the more tacit, and some at the more explicit or formal level. Jones, Mann, Harrison # Blackwell Publishers Ltd 2001. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.
and Stanton provide an eco-innovation case study of domestic dishwashing through the application of TRIZ tools. TRIZ is an example of the more codified approaches to structure discovery processes. At its heart, it grapples with another paradox. Can there be an adequately specified set of routines to permit the generation of novelty? TRIZ enthusiasts believe that they have increasing evidence from direct experience. This particular debate is likely to continue for some while. Mr Bhat and Professor Bowonder takes a case-study approach to explore the transformation of a national company (Titan) into an international one. The accounts from those involved in the changes give credit to a structured and rational process whereby strategic opportunities were identified and seized. Critics of rational models of change will be able to argue that other explanations might also fit the case information. This view would attribute the claims to post-hoc sense-making. Professors Olin and Wickenberg return us to the possible paradox of rules for achieving rule-breaking. The point is one well-known in the creativity literature. Techniques for stimulating creativity have been described as procedures for supporting ‘[mind] sets that challenge [mind] sets. The article shows that projects either broke rules, or that successfully innovative organizations had developed strategies to cope with the risk of rules preventing the progress of innovative projects. Dr Hsu is interested in the less-formal processes of strategic decision-making. He draws on empirical evidence from quasilaboratory studies. These suggest that reports on how strategic decisions are made have simplified complicated hybrid behaviours. So-called rational behaviour often turns out to be a hybrid of rational and experimental, trial-and-error behaviours. The author suggests that it is easy to persist with the simple rational model explanation if studies are conducted in cross-sectional rather than longitudinal mode. In our final paper, the environment in which innovation occurs is once more explored. Professor Suliman had attempted to assess readiness to innovate and climate
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factors within Jordanian companies. His careful study confirms the expected relationship between the two factors. However, he also reveals interesting age and gender differences, and offers a cultural explanation.
Book of the quarter We welcome as guest reviewer, a regular contributor, Pier Abetti. Professor Abetti examines a book advocating the virtues of radical innovation. As an experienced innovator, Abetti adds a word of caution to those who would follow the risky path of seeking the truly new.
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‘If you really believe that you can change the world and you are driven by a strong need for achievement, try out radical innovation and see what happens. However, do not count on continued help from management if you succeed, or sympathy if you fail’, quoting an old Dutch maxim he concludes ‘One does not have to hope in order to start an enterprise, nor is it necessary to succeed in order to persist’. The advice seems to hold for all those concerned with innovation, be it formally or tacitly executed. Tudor Rickards
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3
An Eco-innovation Case Study of Domestic Dishwashing through the Application of TRIZ Tools Elies Jones, Darrell Mann, David Harrison and Neville A. Stanton The benefits of applying a structured method such as TRIZ (Teoriya Resheniya Izobretatelskikh Zadatch: the Russian theory of inventive problem solving) to Eco-innovation are examined through use of two problem-solving tools from TRIZ in an Eco-innovation case study. A novel problem hierarchy model has been integrated to help identify the systems and sub-systems level innovations required for Eco-innovation. The benefits and shortcomings of the TRIZ tools, and the potential contribution of the problem hierarchy model in the innovation process are discussed.
Introduction
T
his study aims to determine the ability of the TRIZ methodology to assist in the step-change innovation, which is urgently required in the field of Eco-innovation. Stepchange innovation has been defined as, innovation that goes beyond incremental changes in products and processes. Evidence shows that incremental environmental improvements to products and processes are not enough to counterbalance population growth and the global increase in unsustainable consumption, and rebound effects (Weisza¨cker et al., 1997) A range of tools and methodologies have been developed and are available to assist sustainable design (Simon et al., 1998). However, existing methodologies still tend to be either evaluation tools or strategic management tools. Eco-innovation requires a solutions focussed approach, problem identification at the systems level and careful consideration of the ‘problem hierarchy’ to determine the level at which the solution tools are going to be employed. The authors became interested in the TRIZ methodology after identifying some overlap in the underlying principles of TRIZ and sustainable design such as: the ‘law of ideality’ and the discovery that strong innovative solutions often turn the bad elements of a # Blackwell Publishers Ltd 2001. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.
system into useful resources. These discoveries have lead the authors to hypothesise that TRIZ tools may help create step-changes to products and processes that are required in Eco-innovation.
The TRIZ methodology The Russian initiated Theory of Inventive Problem Solving, TRIZ (Altshuller, 1984), is arguably the most comprehensive systematic innovation and creativity methodology available. The method has been built around the findings of over 1500 person years of research, and the systematic extraction of knowledge from nearly three million of the world’s strongest patents. Exposure within the field of Eco-innovation has thus far been very limited, despite the fact that the underlying principles of TRIZ have much in common with those of sustainable design. One fundamental concept of TRIZ is that all systems will evolve towards an increased degree of ideality: an ideal system being one that delivers its required function, without cost or harm (Salamatov, 1999). Innovation following this ‘law of ideality’ could contribute to sustainable development, through the delivery of the functions useful to customers without the environmental impacts associated with current systems of production.
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TRIZ offers designers looking for inventive solutions the prospect of a manageable, predictable, systematic innovation capability. The major findings of TRIZ research are: . Problems and solutions are repeated across
industries and sciences; . Patterns of technical evolution are repeated
across industries and sciences; . The most powerful innovations use effects
and solutions outside the field where they were developed and eliminate rather than accept compromises; . Strong innovative solutions often turn the bad elements of a system into useful resources. Since its emergence in the West in the late 1980s, the method has begun to be successfully deployed both as a manual method and a computer-based tool across a number of companies in the US (Proseanic et al., 2000) and, progressively, in Western Europe (Mitchell, 2000) and Japan (Morisha, 1999). Reports of successful use of TRIZ in innovation and its’ integration into existing product and process development are becoming more widespread (Dung, 1995; Mo¨hrle & Pannenba¨cker, 1997; Goel & Singh, 1998)
Introducing Eco-innovation Eco-innovation is the process of developing new products, processes or services, which provide customer and business value but significantly decrease environmental impact (James, 1997). Eco-innovation is one of several approaches towards sustainable design. Sustainable design is one part of a global movement towards sustainable development, which is driven by the realisation that society cannot continue current modes of production and consumption without serious ecological damage. One commonly quoted definition of sustainable development is ‘development which meets the needs of a current generation without compromising the ability of a future generation to meet their needs’ (Brundtland, 1987). Environmentally sensitive design can improve a company’s competitive advantage by supporting expansion into new markets, through the launch of new versions of products with environmental attributes which consumers desire. Philips, for example, launched a range of ‘green products’ in 1998 (Philips Electronics, 1998) and has had corporate environmental commitment since 1987 when they issued their first environmental policy. They have long regarded environmental care as a business opportunity, where
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the corporate ‘Green Image’ is of great value to the company both externally and internally (Meinders, 1999). Such an environmentally proactive company may also benefit financially from the optimisation of production processes, reduced material use, and reduced waste generation. Eco-innovation aims to develop new proucts and services that are not based on redesign or incremental changes to the existing product but rather on providing the consumer with the function that they require in the most Eco-efficient way. A number of tools and methodologies have been developed to support the process of Eco-innovation. Streamlined environmental design tools such as the Life-cycle Design Strategy (LiDS) wheel (Brezet, 1996) and the Eco-compass (Fussler & James, 1996) condense environmental information into a visual map that displays the comparative environmental merits of new design options against the original design. Whilst the LiDS wheel and Eco-compass can provide key starting-points for Eco-innovation however, their main uses are as tools to assess the environmental merits of new product concepts. Other tools such as the Philips STRETCH methodology (Cramer & Stevels, 1997) are specifically designed to support Eco-innovation at the early stages of the product development process. The STRETCH methodology consists of five steps, which help identify the most promising environmental opportunities. The main aim of the STRETCH methodology is to incorporate environmental aspects into the company’s business strategy and help anticipate future environmental opportunities and threats earlier. None of these Eco-innovation methodologies incorporates solution-focused tools. TRIZ tools may be able to fulfil this requirement.
TRIZ and Eco-innovation research Having reviewed existing methodologies in sustainable design, one researcher (Stevenson, 1999) concludes that an effective, systematic approach to sustainable design is greatly needed. Stevenson believes that TRIZ methods can offer the sophistication required and identifies the need to solve sustainable design problems at the systems level. Low, et al. (2000) explored the use of TRIZ to assist in the generation of innovative environmentally friendly solutions. Their paper looks specifically at one sustainable design strategy: product to service Eco-innovation, where products may be substituted by services
# Blackwell Publishers Ltd 2001
AN ECO-INNOVATION CASE STUDY
to fulfil the consumers’ needs whilst decreasing the amount of material consumed. Their case study supports the need to solve sustainable design problems at the systems level by acknowledging the need for a ‘macro model’ of the impacts of product service solutions. They used a limited set of TRIZ tools (separation principles, engineering parameters and contradiction matrix) and hence found that they were best suited to product-centred solutions and had limited ability to address problems within a ‘multi-hierarchical system’.
The research approach taken The methodology for this research is based on a preliminary investigation of TRIZ tools in Eco-innovation for fluorescent tube lighting (Jones & Harrison, 2000). That study helped to define the following steps: . Description of best eco-design practice; . General technology maturity study; . Study of a selected series of patents to
determine the focus of design efforts; . Construction of a ‘problem hierarchy model’; . Selection and application of TRIZ tools; . Discussion of TRIZ tools used.
The TRIZ tool-kit contains a variety of different problem definition and problem solving tools. Previous authors have given more detailed overviews of their workings (Fey & Rivin, 1997). The tools applied to the cases presented in this paper are: a) Technology evolution trends: identification of design features which match points on generic technology evolution trends uncovered by TRIZ research. A selection of these twenty generic trends can be used to suggest ways in which the design could evolve in the future. The trends are selected for use by looking at how well the steps or ‘generations’ of the trends correlate with the observed evolution of the existing product. b) The contradiction matrix: examination of the existing design and formulation of design contradictions in order to match the given specific problem to a generic framework: the contradiction matrix. The contradiction matrix is a 39639 cell matrix where improving features of a design are crossed against worsening features. The cells of the matrix contain the numbers of the recommended generic inventive principles (numbered 1 to 40) with which other problem solvers have successfully eliminated those contradictions.
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5
The product chosen for this study was the automatic domestic dishwasher. In environmentally sensitive design, consideration of the product whole life cycle is crucial. Design for whole life-cycle means considering impacts from materials extraction, through manufacturing, packaging transport, product use to end-of-life disposal. European Eco-labels are founded on the best academic research and extensive collaboration with industry (European Commission, 1998). The European Eco-label for dishwashers confirms a focus on ‘energy and water in use’ (Bjerregaard, 1998).
Environmentally sensitive design
Description of best eco-design practice Initial investigation showed that the automatic domestic dishwasher is a relatively recent phenomenon. There are still a large proportion of first-time dishwasher buyers. The ‘take-off’ of this product is, in part, due to the improved performance of the product; some machines can now claim to be more energy and water efficient than washing dishes by hand. A second contributor to this phenomenon is social; the increase in families where both partners work means that time for domestic chores has decreased and disposable income has increased. In 1995 a major study was carried out that described the long-term efficiency targets for domestic dishwashers (van Holstein & Kemna, 1995). This report suggested many design strategies for the environmental improvement of the dishwasher. These strategies were analysed in terms of ‘increased cost’ versus ‘payback time’. Strategies that achieved a payback time within the product lifetime are preferable. However, studying the dishwashers launched in the late ’90’s we see a number of environmental features that probably do not achieve a payback time within the product lifetime. This can be explained by consumer demand for machines that achieve a high Eco-label status, irrespective of the extra costs incurred. Southcorp Appliances took part in the EcoReDesign program developed by RMIT to enhance its’ expertise in dishwasher design (Gertsakis et al., 1997). They undertook Life Cycle Analysis, design for disassembly and recycling and strategic product development. This best practice case study highlighted the most important design issues for dishwashers; maximising energy and water efficiency and resulted in the development, design and launch of the Dishlex Global Range dishwashers, which were awarded the appliance industry award for the best white-good in 1997.
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VALUE
Mature product minimise cost maximise reliability maximise efficiency maximise performance make it work properly make it work
New product
TIME
Figure 1. Typical Invention Focus S-curve, after Mann (1999).
dishwasher has not yet reached maturity. In the late 90s (from 1998–1999) we start to see more reliability patents and the first patent to reduce cost. The analysis in figure 2 does not show a clear correlation with the invention S-curve described in figure 1. This may be due to the collection of patents studied. The criteria for selecting the patents were based on their potential for environmental improvement, which will be discussed in the next section. The patents often describe new features or improvements to existing sub-assemblies of the dishwasher; however, when scoring the patents their contribution to ‘value’ improvement to the whole dishwasher needed to be assessed.
General technology maturity study TRIZ includes several technology maturity tools, which help determine whether the best strategy for a product might be optimisation or innovation. The application of these tools then helps to determine the selection of TRIZ tools relevant to the creation of a ‘better’ design solution. S-curve analysis is one of the ways of determining technology maturity where ‘value’ is measured against time (Mann, 1999). Although different metrics can be used to determine ‘value’, a general sequence of product development can be described as shown in figure 1. An S-curve analysis of a collection of patent abstracts shows that the technology of the
minimise cost maximise reliability maximise efficiency maximise performance make it work properly
1999-12-14 US6001190
2000-03-14 US6035471
1999-11-09 US5980006
1999-05-18 US5904166
1999-03-23 US5884821
1999-03-16 US5882096
1998-10-20 US5823211
1998-03-10 US5725001
1997-08-12 US5655556
1997-02-11 US5601195
1997-01-21 US5595200
1995-07-04 US5429679
1995 -10-31 US5462348
1995-07-04 US5429146
1995-05-09 US5413259
1994-11-29 US5368379
1995-01-24 US5383724
1994-02-08 US5284523
1993-06-29 US5223042
1994-01-04 US5274954
1992-11-24 US5165433
1992-09-01 US5144543
1992-09-01 US5143306
1992-07-14 US5129411
1991-10-15 US5056543
1991-05-21 US5016667
1991-03-12 US4998548
1991-01-15 US4984596
1987-06-16 US4673441
1985-07-30 US4531572
1985-07-16 US4529032
1985-04-09 US4509687
1982-09-07 US4347861
1982-08-10 US4343349
1981-01-27 US4246916
1980-09-09 US4221547
1978-12-05 US4128287
1980 -01-08 US4182351
1978-06-27 US4097307
US3923073 1975
1978-01-24 US4070204
make it work
Figure 2. Patent Collection of Dishwashers Studied, Dots Indicate Invention Focus.
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1975
US3923073
1978
US4070204 Low-energy dishwasher
1978
US4097307 Fill control for an automatic dishwasher
1980
US4221547
1981
US4246916 Dishwasher with steam generating heater and cold water input
1982
US4343349 Heat pipe device and heat pipe fabricating process
1982
US4347861 Dishwasher soil separator
1985
US4509687
1985
US4529032 Method of and apparatus for recovery of waste energy
1985
US4531572 Method of and unit for recovery of waste energy
1987
US4673441 Dishwashing method: controlled inlet valve for supplying cleansing liquid into the sump US4984596 Operating device for a dish-washer
1991
Means for heating incoming water in a dishwasher
Multiple spray distribution system for a domestic dishwasher
US4998548
1991
US5056543
1992
US5129411
1992
US5165433
1993
US5223042 Washing process for an automatic dishwashing machine
1994
1995
US5284523 Fuzzy logic control method for reducing water consumption in a machine for washing articles US5368379 Dishwasher chassis: a part of the shell comprising the bottom of the tub US5413259 Device for repeated, automatic metering of doses of a powdered detergent in water-conducting cleaning machines US5429146 Dishwasher connectable for single-phase alternating current connection US5429679 Method for operating a low energy domestic dishwasher
1995
US5462348 Dishwasher utensil tray
1997
US5595200 Dishwasher with vertically adjustable basket
1997
US5601195 Basket with a movable divider for a dishwasher
1997
US5655556 Dishwasher with rotating spray agitator
1998
US5725001 Dishwasher with pH-controlled program pre-selection
1998
US5839097
1999 1999
US5882096 Dishwasher: fastening being less complicated and therefore more cost-effective and having better stability US5884821 Device for dispensing detergent, particularly for dishwashers
1999
US5904166
1999
US6001190 Reduced energy cleaning appliance
1999
US6035471 Method for detecting impermissibly high scaling in a waterconducting domestic appliance
1995 1995
Liquid level control arrangement for a dishwasher Soil separator for a domestic dishwasher
Electrical home appliance: system design concept
functional units in the product
scarce ordepleting resources used
X X X X X X X X X X X
Self-cleaning filter for a dishwasher Device for drying dishes in a dishwasher
waste not Eco-efficiently recycled
hazardous substances emitted
X X X
Resilient mount for dishwasher motor and pump assembly
1991
1994
energy used per unit service
material used per unit service
Eco-innovation headings
X X X X X X X X X X X X X X X X X X X X
Spray arm support for front-loading dishwashers
X X
X
Figure 3. Dishwasher Patent Collection Studied, Crosses Indicate the Potential Environmental Improvements Resulting from Each Invention.
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Study of a selected series of patents to determine the focus of design efforts Figure 3 shows the collection of patents studied. It was possible to deduce the main environmental benefits of each innovation from the descriptions in the abstracts, the claims and the background information given in the patents. The authors assessed the extent to which the innovation resulted in changes in quantities of: . material used per unit service; . energy used per unit service; . hazardous substances emitted to air soil
and water; . waste not Eco-efficiently recycled; . scarce or depleting resources used; . functional units in the product.
Pay-per-wash
Each potential environmental ‘value’ improvement described in the patent was marked with an X. These Eco-innovation headings are taken from the Eco-compass (Fussler & James, 1996): one of the most successful Eco-innovation tools. The headings form a condensed and comprehensive approach to Eco-innovation. From the table it is possible to observe a shift in innovation focus. Until the 1998 the patents mainly record: efficiency improvement of the dishwasher (column 2: energy used per unit service) and some optimisation in the amount of detergent (column 3: hazardous substances emitted). From 1999 onwards, the patents record more developments in lengthening the product lifetime and decreasing time before maintenance or repair (column 6: number of functional units in the product). Columns 1, 3 and 4 all concern the actual material in the product itself, no patents record a focus on these issues, confirming that the main environmental impacts of the dishwasher are its’ use of energy, water and detergent. This table summarises the manufacturers’ considerable design efforts to reduce the environmental impact of their products.
Construction of a ‘problem hierarchy model’ The van Holstein & Kemna (1995) report states the main factors affecting automatic cleaning of dishes are: time, temperature, detergent and mechanical action. However, the report also specifies that at a given volume and composition of the total wash load per period of time (per week/year) the
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efficiency of the dishwasher will depend on the following three parameters: 1. Consumer behaviour 2. Machine dependent variables 3. Parameters which depend on the energy/ infrastructure supply The environmental contradictions and solutions hierarchy shown in Figure 4 is broken down under these headings. The machine dependant variables are broken down further, based on the description of best ecodesign practice collated for this study: 1. 2. 3. 4.
Increasing the product life-time Reducing detergent usage Reducing water usage Reducing heating energy
Most work has gone into reducing the heating energy as this represents 90% of the energy consumed by the dishwasher. The main motivation to reduce the volume of water used is to obtain the reduction in heating energy required for that volume. Another major factor influencing the efficiency of the machine is the usability of the machine. The Eco-label highlights the need for companies to encourage responsible user behaviour by including special instructions for optimal use of their product. Manufacturers have focused on: improving the stacking efficiency, ease of maintenance to prevent breakdown and the optimisation of the wash programs offered. Relatively few manufacturers have patented infrastructure and systems changes. However Bosch (US patent 5839097) and Electrolux (Electrolux, 2000) have started research in these areas. Electrolux have launched a new business model for clothes washing called ‘functional sales’ in which they offer customers pay-per-wash scheme. Customers have a washing machine in their home without ownership. Paying for the number of usages creates customer incentives to reduce the number of washes, which may reduce the overall energy and detergent consumption.
Selection and application of TRIZ tools The requirement to reduce energy and water usage and the potentially profound shift in market paradigm from the selling of products to ‘functional sales’ are taken as evolution trend drivers. Elements of the dishwasher intellectual property database have been examined to suggest how the TRIZ trend prediction and other tools may be deployed to
# Blackwell Publishers Ltd 2001
Systems Level
AN ECO-INNOVATION CASE STUDY
Cost of dishwasher performance improvement
Environmental Contradiction
Remain competitive in the dishwasher market
Cost of dishwasher performance improvement
Environmental Contradiction
Payback (no. uses) before environmental benefit
Sub-systems Level
1
Solutions patented
9
Improve useability: support consumer efficiency
2
3
Infrastructure and systems changes
Improve dishwasher efficiency
1 Increase life-time
Ease of maintanence: self cleaning filters, automatic scaling detection More appropriate and variable wash programs Efficient stacking: improved rack and basket design Alternating arms movement cleans dishes even when obstructed
Use hot and cold fill
Plumb into domestic system: central heating and other appliances Introduce computer contolled appliance managment for efficient energy and water usage
2
3
Reduce detergent usage
Reduce water usage
Accurate filling: replace fixed time fill detect surging in the pump
Improve soap dispenser design
Improve spray arm support to reduce wear
Reduce heating energy
Change heating design to inline or surface heating i.s.o. whole sump
Reduce noise and vibration from circulation pump
More robust tub for transport stability
4
Soil detection and automatic detergent supply 2 phase detergent deployment: part of soiled wash liquid is discarded and replenished
Reuse water within cycle using soil seperatrs: filters, cetrifugal, hydroclone Alternate water delivery between spray arms
Heat exchanger to capture heat from dirty water for next cycle Use unheated convection and condensation cambers to dry dishes pH measurement determines detergent type and regulates to optimum temperature
Figure 4. Problem Hierarchy Model, Summarising Patented Solutions from Best Practise Eco-Design for Dishwashers. speed the identification of potentially good solution directions. The basic operation principle of the trends is described in the previous section that covers the research approach taken. Systems evolve from left to right in the following examples (see figures 5 to 8). To use the trends as an evolution tool, a designer is required to make connections between the current technical system and an evolutionary stage on the trend (Alsthuller, 1984).
Applying the Technology Evolution Trends The majority of dishwasher patents utilise jets of water to assist in the cleaning function. These jets may be related to a TRIZ identified trend known as rhythm co-ordination shown in Figure 5. The use of continuous water jets in dishwashers is still common, and can be classified as a system at the first stage along
# Blackwell Publishers Ltd 2001
the evolution path. The trend suggests the use of pulsations to be a good next evolution step, and, indeed the first washers using pulsed jets are beginning to emerge. Southcorp Appliances launched their Dishlex Global range, which includes their Hydrapulse1 wash action. The advantage gained by moving to a pulsed jet is that cleaning effectiveness is improved and the amount of water required is reduced. Other manufacturers have been working on similar strategies to reduce water consumption. In 1985 General Electric patented a system that would alternate the delivery of water to the upper and lower spray arms (US patent 4509686) to reduce the overall flow rate and thereby the water consumption. In 1997 ElectroluxZanussi patented (US patent 5655556) a system that would alternate delivery of water to two nozzles on the same arm with opposite thrusts.
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F
F
t Continuous action
F
t Pulsating action
F
t Pulsation in the resonance mode
F
t Several actions
t Traveling wave
Figure 5. Rhythm Co-ordination Trend. (after Invention Machine, 1995).
The next stage suggested in the rhythm co-ordination trend would be systems that include resonance principles. However, no dishwasher manufacturers have yet developed such systems, though these have been developed and implemented for other jet cleaning applications such as high pressure ship hull cleaning. ServoJet1 Interrupted Jet nozzles developed by Dynaflow Inc., employ passive acoustic resonance and have been successfully applied in ship hull cleaning (Chahine, 1996). The controllability trend (Figure 6) suggests that benefits may be derived by adding feedback where it is not currently present. This trend is demonstrated clearly in dishwashers where first models used simple fill times to achieve the right amount of water for their cycles. This fill time had to take account of the lowest acceptable water pressure that might be encountered in a home; in most homes therefore, the machine would be overfilling with water. In 1978 an intelligent fill control was developed (US patent 4097307). A similar but more recent version of the invention uses Fuzzy logic circuitry to sense the diminished cavitation in the freshwater pump (US patent 5284523). Several other aspects of the dishwasher are seeing an increased level of intelligence in the feedback of the system such as: measured pH-level of the wash liquid and subsequent adaptation of wash program (US patent 5725001); measurement of turbidity and hence determining threshold values for descaling procedure (US patent 6035471); measurement of particulate soil concentration and automatic selection of appropriate wash cycle (US patent 4673441).
Controlling action directly on the object
Action through actuating system
This trend highlights the possibilities for further feedback in the system which would optimise energy and water usage. One concept might be to develop machines which measure and feedback the cleanliness of the contents throughout the program and automatically optimise the timing of the wash cycles. The substance and object segmentation trend (Figure 7) suggests profound changes in dishwasher systems. The majority of current systems operate at the ‘liquid’ stage of this evolution trajectory. Increasing segmentation by atomising water droplets for example, would reduce water usage. Further moves to gaseous solutions, using steam for example, might offer additional benefits. Looking at this trend suggests that the use of ‘fields’ would be next evolutionary stage. The ‘fields’ solution trigger suggests a number of new design concepts: use of ultrasonics, a well established method in other industries of improving water atomisation; use of electrostatics, a potential method for encouraging charged water droplets to find their way onto dishes; and use of microwaves, potentially a more effective way of heating the water provided the problem of metallic parts and crockery can be overcome. The surface segmentation trend (Figure 8) is another where the majority of dishwasher systems are at the left hand end of the evolutionary possibilities. Dishwashers are made with relatively simple materials and manufacturing processes. A simple idea developed from this trend might be use of a Lotus Effect surface finish on the walls of the dishwasher or the dishes.
System with feedback
Figure 6. Controllability Trend. (after Invention Machine, 1995).
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AN ECO-INNOVATION CASE STUDY
Monolith
Segmented monolith
yy ,, Liquid, powder
11
F Gas, plasma
Field
Figure 7. Substance and Object Segmentation Trend (after Invention Machine, 1995).
The Lotus Effect is a biological system based on surface roughness caused by different microstructures. A Lotus Effect surface causes contaminating particles to stick to the droplet which rolls off the surface (Barthlott & Neinhuis, 1999) These surfaces would reduce the detergents required and improve the runoff back to the sump, thereby reducing the water consumption in the dishwasher.
Trends and ‘Complexity’ The majority of the technology evolution trends identified by TRIZ ensure that the ‘benefits’ and hence ‘ideality’ are increasing as technology evolves from left to right. Unfortunately, for the majority of trends, ‘complexity’ often increases too. For a large number of systems, complexity and reliability or durability are in contradiction. If ‘reliability’ becomes the pre-dominant design issue, then designers may be pushed to use the trends in a right-to-left direction, and thus potentially degrade some of the performance benefits. A good strategy in this scenario is to revert to using the contradictions matrix. The basic operation of the contradiction matrix is described in an earlier section that covers the research approach taken. In a previous study Mann & Hughes (1999) examined which of the 40 inventive principles are most likely to be recommended by the contradictions matrix in situations where ‘reliability’ is to be improved. These are the principles
Flat surface
numbered 35, 10, 11, 3, 28 and 40.
Applying Inventive Principles Some of the more recent patents illustrate good examples of manufacturers addressing these reliability issues with the suggested principles: Principle 35: Change of Physical and Chemical Parameters – suggests change of aggregate state, change of concentration or consistency, change of flexibility, or change of temperature. Most dishwashers have an ‘eco’ or ‘bio’ setting which keeps the wash temperature between 50C8 and 55C8. This saves energy and provides the optimum operating temperature for bio-enzymes present in modern biological detergents. AEG have taken this one step further with their pHcontrolled program pre-selector which automatically selects the wash program temperature by measuring the pH and thereby determining the detergent type (biological or non-biological) (US patent 5725001). Principle 10: Prior Action – suggests that if your object is subjected to harmful factors in its environment, then create conditions that will protect the object from those harmful factors beforehand. One recent example of such a prior action principle is US patent 6035471, a method for detecting impermissibly high scaling in
Surface with protrusions
The contradictions matrix
yy ,, yyy ,,, ,, yy Rough surface
Surface with active pores
Figure 8. Srface Segmentation Trend (after Invention Machine, 1995).
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a water-conducting domestic appliance. This feedback device will detect levels of scaling and will warn the user to descale on time. Descaling regularly will improve efficiency and improve product lifetime. Principle 11: Beforehand Cushioning – suggests that if your object is unreliable, create conditions in advance that will protect the object. Several manufacturers have been working to overcome problems created by clogged spray arms and filter problems. Various types of self-cleaning filters have been developed to improve usability and time needed before maintenance. One example is US patent 4998548 which combines course and fine filters. A second example of such a ‘beforehand cushioning’ principle is a new manufacturing method for the dishwasher chassis (US patent 5368379), which makes the dishwasher more robust during transport and solves the majority of leaking problems Principle 3: Local Quality – suggests making the object non-uniform, making the environment non-uniform, or if multiple functions are to be performed divide the object into parts according to those functions. One recent example of dividing the dishwasher into parts according to functions required can be seen in the Dishlex Global dishwashers developed by Southcorp. One of their features is the gentle wash action on the top shelf to safeguard fragile items and the more vigorous wash action applied to pots and pans on the bottom shelf. However, not all of the suggested reliability principles have been exploited by manufacturers. Examples for future exploitation might be: Principle 28: Mechanics Substitution – suggests replacing mechanical solutions with other physical solutions; acoustic, optical, magnetic, thermal. This principle suggests significant technological changes in the system, possibly similar to the example concepts proposed in the substance and object segmentation trend earlier. These new concepts begin to question the basic cleaning factors set out in the problem hierarchy model: time, temperature, detergent and mechanical action. Implementing radical new technologies will mean that automatic dishwashing begins to move further away from the simulation of the washing of dishes by hand.
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Principle 40: Composite Materials – suggests the use of composite materials instead of uniform ones. As mentioned before the materials and processes involved in the manufacture of dishwashers are relatively basic. Materials have been predominantly selected for their ability to endure prolonged exposure to the harsh detergents used. Inventions in nonstick crockery, such as the Lotus Effect surfaces suggested earlier, would ‘soften’ the detergents required and thereby offer a much wider range of possible materials for the internal design. This would mean that the designer would be able to specify cheaper, lighter, and more recyclable materials.
Discussion of TRIZ tools used Four (see figures 5-8) of the twenty technological evolution trends from TRIZ were selected and applied to the dishwashing case study. First the current stage of evolution was identified by looking at some systems already patented. Subsequently, all trends successfully identified new design concepts or strategies to be explored. The problem of increasing complexity causing diminishing ‘reliability’ was highlighted and six specially selected inventive principles were applied to the case study. Recently patented solutions that deal with reliability issues were identified and were used to illustrate four of the selected principles. New concepts from the previous section were used to illustrate the other two principles. Both the trends and the inventive principles used in this way were able to suggest changes to the systems within the dishwasher. Both are able to generate conceptual and strategic solutions. From the patents studied it has become apparent that dishwashers are undergoing significant research and development as the potential market size continues to grow. Application of both trends and inventive principles show potential to speed-up the development of the dishwasher. Sustainable product and process design has only recently become a significant factor in innovation. However, TRIZ is built largely from historical data, the problem solving strategies contained in the tools are therefore perhaps unfocused when it comes to solving eco-specific problems. This is particularly evident in the contradiction matrix. The contradiction matrix is both in need of update and reformulation to incorporate better, the parameters specific to environmental design.
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AN ECO-INNOVATION CASE STUDY
In previous research, specific Eco-innovation parameters were highlighted to be included in the contradiction matrix (Jones & Harrison, 2000*).
Conclusions TRIZ tools have been developed through capture of the world’s best inventive practices. TRIZ has identified that systems inherently ultimately evolve in a direction of increasing ideality, a part of which says that the ‘harm’ in a system will decrease. The case study here has demonstrated how TRIZ could be applied to assist Eco-innovation. Looking at the solutions generated in relation to the original problem hierarchy diagram reveals that both the trends and the contradiction matrix generated patentable solutions at the sub-systems level. This study chose not to focus on concepts that would overcome the environmental contradictions at the highest levels, by for example looking at means other than ‘dishwasher’ for delivering the function ‘clean dishes’. From current TRIZ research (Mann 2000*, Domb, 2000), the authors surmise that there is still considerable work to be done on integrating TRIZ tools at this strategic level. Future research will continue to look at improving the TRIZ tools specifically for ecoinnovation as well as improving their selection and integration in sustainable design practice.
References Altshuller, G. S. (1984) Creativity as an exact science. The theory of the solution of inventive problems, Gordon and Breach Science Publishers, New York, USA. Barthlott, W. and Neinhuis, C. (1999) Correlation between ultrastructure, wettability and contamination: The Lotus-Effect1 [http://www.botanik.uni-bonn. de/system/bionics.htm] Department of Botany and Botanic Garden, University of Bonn, Germany. Bjerregaard, R. (1998) ‘Establishing ecological criteria for the award of the community ecolabel to dishwashers’ Official Journal of the European Communities, 4 August 1998. Brezet, H. (ed) (1996) PROMISE manual Delft University of Technology, TME Institute and TNO product Centre, the Netherlands. Brundtland, G. H. (1987) Our common future. World Commission on Environment and Development, Oxford, Oxford University Press, UK. Chahine, G.L. (1996) Development of a Self-resonating Cavitating Jet Cleaning Tool for Underwater Fouling Removal, Dynaflow Inc., Internal Technical Report 6.002-27, Fulton, MD, USA, March1996
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Cramer, J. and Stevels, A. (1997) ‘STRETCH: Strategic Environmental Product Planning with Philips Sound and Vision’ Journal of Environmental Quality Management, Autumn Issue pp 91–101. Domb, E. (2000) ‘Strategic TRIZ and Tactical TRIZ: Using the technology Evolution Tools’, TRIZ Journal online, [http://www.triz-journal.com], Issue January 2000. Dung, P. (1995) ‘TRIZ: Inventive Creativity Based on The Laws of Systems Development’, Creativity and Innovation Management, 4(1), pp. 19–30. Electrolux (2000) Electrolux web site: Corporate environmental pages, ongoing projects [http:// 193.183.104.77/node323.asp] European Commission, DGXI-E.4. (1998) Information brochure: European Eco-label at a Glance, European Commission, Brussels. Fey, V. R. and Rivin, E. I. (1997) The Science of Innovation: A Managerial Overview of the TRIZ Methodology, The TRIZ Group, Southfield, Michigan, USA. Fussler, C. and James, P. (1996) Driving EcoInnovation: a breakthrough discipline for innovation and sustainability, Pitman Publishing, London, UK. Gertsakis, J., Lewis, H., Ryan, C. (1997) A guide for EcoReDesign. National Centre for Design at RMIT, Melbourne, Australia. Goel, P. S. and Singh, N. (1998) ‘Creativity and innovation in Durable Product Development’, Computers and Industrial Engineering, Vol. 35, No. 1-2, pp 5–8. van Holstein & Kemna (1995) Dishwashers: long-term efficiency targets, a Technical and Economic Analysis, van Holstein & Kemna, Delft, the Netherlands. Invention Machine (1995) TechOptimizer TM: KnowledgeBased Innovation Software, [http://www.invention machine.com] Invention Machine Corporation, Boston, Massachusetts, USA. James, P. (1997) ‘The Sustainability Circle: a new tool for product development and design’, Journal of Sustainable Product Design, Issue No. 2, July 1997, pp. 52–57. Jones, E. and Harrison, D. (2000) ‘Investigating the use of TRIZ in Eco-innovation’, TRIZ Journal online, [http://www.triz-journal.com], Issue September 2000. Jones, E. and Harrison, D. (2000*) ‘Using TRIZ methodologies to contribute to Eco-innovation: developing ‘Eco-inventive principles’ in proceedings of TRIZCON2000: 2nd annual AI TRIZ Conference, Alsthuller Institute, Nashua, New Hampshire, USA, 30 April–2 May 2000. Low, M.K., Lamvik, T., Walsh, K., Myklebust, O. (2000) ‘Product to Service Eco-innovation: the TRIZ model of creativity explored’, in proceedings: International Symposium on Electronics and the Environment, IEEE, San Francisco, California, USA, 8–10 May 2000. Meinders, H. (1999) Point of No return, Philips Ecodesign Guidelines Philips Corporate Environmental & Energy Office (CEEO), Eindhoven, The Netherlands. Mann, D. (1999) ‘Using S-curves and Trends of Evolution in R&D Strategy Planning’, TRIZ Journal online, [http://www.triz-journal.com], Issue July 1999.
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Mann, D. (2000*) ‘Application of TRIZ tools in a non-technical context’, TRIZ Journal online, [http://www.triz-journal.com], Issue August 2000. Mann, D. and Hughes, E.J. (1999) ‘TRIZ-Based Root Cause Failure Analysis For Hydraulic Systems’, Hydraulic Failure Analysis: Fluids, Components, and System Effects, ASTM STP 1339 Mitchell, I. F. (2000) ‘ Edge Suck Off: Towards the Ideal System’, TRIZ Journal online, [http:// www.triz-journal.com], Issue August 2000. Morisha, M. (1999) ‘Relation of the invention process to TRIZ (Example: High efficiency DCDC converter for liquid crystal watches)’ presented at Invention Machine Corporation 1999 User Group Conference, Boston, MA, USA, 17–19 Oct. 1999. Mo¨hrle, M. G. and Pannenba¨ cker, T. (1997) ‘Problem-Driven Inventing: a Concept for Strong Solutions to Inventive Tasks’, Creativity and Innovation Management, Vol. 6, No. 4, pp 234–247. Philips Electronics (1998) From Green to Gold catalogue, Philips Corporate Environmental & Energy Office (CEEO), Eindhoven, The Netherlands. Proseanic, V., Tananko, D., Visnepolsch, S. ‘The experience of the Anticipatory Failure Determination (AFD) method applied to an Engine Concern’, TRIZ Journal online, [http://www. triz-journal.com], Issue June 2000.
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Salamatov, Y. (1999) TRIZ: the right solution at the right time, Insytec B.V., Hattem, the Netherlands. Simon, M., Evans, S., McAloone, T., Sweatman, A., Bhamra, T., Poole, S. (1998) Ecodesign Navigator, Manchester Metropolitan & Cranfield University, UK. Stevenson, K, Kogan, S., Kinnel, T. (1999) ‘ITD Challenge for Sustainable Product and Process Design’ Scientific Conference: Innovative Technology of Design Today & Tomorrow, St Petersburg, Russia. Weizsacker, E. von, Lovins, A. and Lovins, L.H. (1997) Factor Four: Doubling Wealth – Halving Resource use, Earthscan Publications, London, UK.
Elies Jones is a PhD student in the Cleaner Electronics Research Group, Department of Design, Brunel University. Darrell Mann is Industrial Fellow in the Engineering Design Centre at Bath University. Dr David Harrison is a Reader in Design and a founder member of the Cleaner Electronics Research Group, Department of Design, Brunel University and Professor Neville Stanton is the Head of Research in the Department of Design at Brunel University.
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Rule Breaking in New Product Development – Crime or Necessity? Tommy Olin and Jan Wickenberg The purpose of this study is to investigate the effect of applying general rules in organizations to govern multiple new product development projects. Data were collected in structured interviews with project managers and project members from seven successful projects within Swedish companies. Results show that projects either broke rules or that organizations had developed strategies to cope with the risk of rules preventing the progress of the projects. The project managers of the rule following projects reported lack of rule breaking to be the result of the rule design at each company, intending to minimize the risk of rules preventing the progress of projects. With the exception of the manager of the rule changing/removing project, project managers show a relaxed attitude to breaking general rules that hinder project progress. The study indicates that frameworks of common project management rules increase the risk of delay in new product development projects, unless strategies of rule breaking or dynamic rule modification are applied. Applications of emergent standard management philosophies and practices to innovation are discussed.
‘‘Written rules are repositories of organizational lessons, but the learning that deposits new lessons into rules and remove old ones is notorious for generating myopic, path-dependent, and inefficient histories’’ (March, Schulz & Zhou, 2000 p2).
Introduction
T
he firms of our society have greatly increased their spending on Research and development since the beginning of the 1980s (Sandgren, 1996; Braunerhjelm, 1998). As one of the managerial duties is to execute strategic control of organizational resources, it is no surprise to find emergence of interest to control and manage R&D and new product development (NPD) (Ekvall, 2000). This may be performed by using any or several of the emergent standard management philosophies such as Concurrent Engineering, and ISO 9000, containing standardizing rules and regulations. As examples of application, they may impose actions of coordination and feedback, force formalization of practice and authorization of change of practice, or regulate organizational design . Tools for the management of projects emerged around the year 1900, and gained in # Blackwell Publishers Ltd 2001. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.
popularity with the success stories of American arms race projects during the late 1950s and the early 1960s. Its stressing of rationalanalytical planning turned out to be devastating when it was applied to the war theatre of Vietnam and the development of project management tools took other routes (Engwall, 1995; Adler, 1999). However, Ekvall (1993) has called attention to the fact that today’s handbooks in project management still follow models that contradict accepted knowledge and models of creative problem solving. This sounds irrational, but management might be tempted to adopt practices for fashionable reasons rather than rational (Abrahamson, 1991; Huczynski, 1993; Collins, 2000). Research has shown new product development to have several peculiarities. Among these, it is a process characterized by organizational politics, since advocators of any innovation need to negotiate and acquire a share of the organization’s common resources to make room for the development of their innovation (Frost and Egri, 1991). Ekvall (2000) has shown that emergent management philosophies and practices succeeds to different extent when it comes to measures of effectiveness, quality, and NPD generation, and remarkably, that one of them (ISO 9000) corroborated negative relations to outcome
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Standardizing work
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variables. To use Ekvall’s words; ‘‘as management philosophies and practices geared to efficiency and standardization work against variation, it becomes a justified attempt to analyze the experiences of people in organizations who have to balance the tension between efficiency and innovation (Ekvall, 2000 p9)’’. In short, how does managerial practices accord with new product development’s striving for creativity, innovation and autonomy? Abundant anecdotes tell us of defective rule design. Some anecdotes address how deviant rule-following in fact is what keeps business running. The union at the old stateowned British Rail declared a work-to-rule, whereby employees did exactly what was required by the regulations developed by the railway authorities. The result was that hardly any train left on time. Schedules went haywire, and the whole railway system quickly slowed to a snail’s pace, if not a halt, because normal functioning required that the employees found shortcuts or at least streamlined procedures. The employees had discovered the power of ‘‘working to rule’’ and used that, rather than going on strike, to further a claim or address a grievance, a process that proved costly to employees because they forfeited their pay (Morgan, 1998). A discussion of rules in the literature of organization studies may begin with Max Weber and the links he made between rules, bureaucratization, and modernity (Weber, 1947). Today rules represent significant parts of modern organizing technology. Sociologists have studied crime and deviant behavior in society at large and researchers of organizations have put effort to finding explanations and setting norms for rule birth, change and termination – but little interest has been paid to the ‘receiving end’ of rule design and maintenance. For example, what are the consequences if different rules do not coincide with each other, hence forcing persons to break either rule to comply with the other? The aim of this study is the emerging coupling of new product development projects and the use of rules to exert managerial control. The process is at least associated with elements of creativity and with producing innovative results, which is known to be nurtured by autonomy and flexibility. Projects in general are related to uniqueness and specified objectives, while managerial control, in terms of rule making and standardization, aims at efficiency and establishing generalizable work processes to facilitate coordination. Our research questions are geared towards understanding how participants in such projects perceive the use of rules, and why rules are broken or followed.
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Theoretical background Dictionary definition. Literature, which addresses the phenomenon of rules, often lacks precise definitions. Turning to the Oxford Dictionary (1999), we get ‘‘rule; a regulation or principle governing conduct or procedure within a particular sphere’’, ‘‘regulation; a rule or directive made and maintained by an authority’’, and ‘‘principle; a rule or belief governing one’s personal behavior’’. Webster’s (1999) defines a rule as ‘‘a prescribed guide for conduct or action; . . . an accepted procedure, custom, or habit; a regulation or bylaw governing procedure or controlling conduct’’. The disparity of these definitions indicates that the word ‘rule’ has an imprecise use in society at large, and we can therefore expect imprecise use of these terms during collection of data in studies such as the one at hand. Accordingly, we will summarize how researchers mainly in the field of organizational studies, have approached the concept of rules. Objectives of rules; coordination and regulation. One researcher who has dealt with rules in organizations is Perrow, who addressed the concept of rules as follows: rules have several applications in, and effects on organizations; they protect as well as restrict; coordinate as well as block; channel effort as well as limit it; permit universalism as well as provide sanctuary for the inept; maintain stability as well as retard change; permit diversity as well as restrict it. They constitute the organizational memory and the means for change. As such, rules in themselves are neither good nor bad (Perrow, 1979). Organizations that have become too large to be coordinated through direct supervision, usually adopt rules to standardize work. One of the oldest conceptions of rules in theories of organizations is a conception that sees rules as generated to improve the efficiency of a team, defined as a collection of individuals who share objectives. They do not face problems involving conflicts of interest, though they face problems of communication and coordination in order to maximize the achievement of their shared objectives (Mintzberg, 1979). In this conception, rules are conscious, intentional actions directed toward improving organizational performance. Specifying rules that make action reliable and consistent approaches the problems of coordination and communication. Reliability and consistency of action are necessary to assure coordination among the various parts of the organization, particularly as participants leave and are replaced by new people (Pugh, 1997).
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Galbraith (1973) has argued that organizational structures evolve according to how much information must be processed during the execution of a task sequence. The primary virtue of rules is that they eliminate the need for further communication among sub units or structures of the organization. Information requirements increase as diversity, interdependence and uncertainty increases. Organizations deal with increasing information loads using three coordinating mechanisms; hierarchical referral, goal setting and rules. Mintzberg (1979) takes this reasoning further and identifies five different coordinating mechanisms for organizational work; mutual adjustment, direct supervision, standardization of work, standardization of outputs and standardization of skills. Transition occurs from mutual adjustment to direct supervision to standardization, as work becomes more complex. By this we see how rules could be adopted to achieve three different standardization purposes: (a) standardization of procedure (work method), (b) standardization of output, and (c) standardization of skill. Mintzberg (1979) also tells us that rules consist of explicit or implicit norms, regulations, and expectations that regulate the behavior of individuals and interactions among them. Furthermore, individual and collective actions are organized by rules, and social relations are regulated by rules. Rules are designed and deployed, rules are in use, rules raise frustration, rules are questioned, rules are followed – and rules are broken. As an example of adjacent terminology, one can compare Mintzberg’s definition of rules to Bass’ (1990) definition of norms: shared group expectations about behavior; socially defined and enforced standards about how the world should be interpreted and how one should behave in it. Another adjacent terminology can be found in literature regarding standardization (e.g. Brunsson and Jacobsson, 2000; Tamm-Hallstro¨m, 2000), where standards are described as inter-organizational sets of product and process design rules. Even if rules can be seen as frustrating, can become questioned and can be broken, rules would not be deployed as an organizational mechanism if they had not been effective. According to Weber, rules are a necessity for legal authority (1947). This form of authority is resting on a belief in the legality of patterns of normative rules and the right of those elevated to authority under such rules to issue commands. To Weber, one does not follow a person, but a rule. Fayol (1949) wrote that discipline, being the outcome of different varying agreements, naturally appears under the most diverse forms; obligations of obedi-
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ence, application of rules can vary from one firm to another, from one group of employees to another, from one time to another. Nevertheless, Fayol (1949) was convinced that norms, rules and discipline are essential for the smooth running of business and that without discipline no enterprise could prosper. Rules may be used for other purposes than coordination. Perrow (1979) argues that rules may protect those who are subject to them and that rules are means of preserving group autonomy and freedom. To reduce the number of rules in an organization generally means to make it more impersonal, more inflexible, and more standardized. On the other hand, Morgan (1998) has observed that rules may be used as a protection for their creator from blame in case of a serious blunder . Perrow (1979) argues that rule-less organizations are likely to be either completely automated, or completely professionalized, turning out expensive and exotic services. Using the definitions of Mintzberg, an automated organization would have the work standardization rules built into it and a completely professionalized organization would have a standard of skills. Thus there are no rule-less organizations once they have outgrown the direct supervision phase. General or situational rules. On the societal level, sociological theories inquire how society and the individual interact and consist of two subgroups; adherents of objectivism and adherents of subjectivism. Adherents of objectivism define deviance as a crime against mutually agreed norms. According to this perspective a common consensus of what is considered as deviance and what is considered not as deviance is present in the society. There is a list of dos and don’ts that is known by every individual. Adherents of subjectivism started to challenge the objectivism around the 1960s and looked into how other persons made the deviant into a deviant. From this point of view, deviance is not a quality of the act a person commits, but rather a consequence of the application by others of rules and sanctions to an offender (Becker, 1962). The deviant is one to whom the label has been applied; deviant behavior is behavior that people so label. Our perception of organizations affects our design and application of rules. Sociologists have been fond of the contrasts between the official system (with a dominant logic of rulefollowing) and the unofficial system (some official rules can be broken) of organization because it indicates that organizations are to be perceived as organic systems rather than mechanical ones (Perrow, 1979). Morgan
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follows the same reasoning when he states that we organize as we imaginize. Hence, Morgan (1998) argues for using complementary perspectives and philosophies, and that the most widespread perspective of organizations is the mechanistic perspective. This tends to produce Cartesian organizations, aiming for design, control and predictability (see also Dahlbom and Mathiassen, 1993). In order to understand the concept of rule breaking, it seems natural to apply a frame of reference other than the mechanistic one. If the mechanistic perspective had been entirely correct, there would be no rule breaking. It is clear that actions are rarely uniquely specified by rules. Rules are generic; situations are specific. Any particular situation has a number of different interpretations and may evoke a number of different identities with different rules. Relevant rules may be overlooked, particularly if the collection of rules is large. Any particular situation may evoke several rules with quite different implications (March et al., 2000). Rules and action; rule taking/breaking/changing. Perrow (1979) also argues that while some rules are needed in organizations, it is generally felt that most organizations have far too many rules. The good, effective rules are rarely noticed; the bad ones stand out. Complaints about excessive rules or bad rules are generally symptomatic of more deepseated problems that cannot be solved by changing rules. Some merely reflect the fact that people make rules, and people are not generally geniuses. The problem is not rules in general, but the particular ones that need changing. So, why would they need changing, and what prevents them from being changed? Rules can be viewed as recipes for dealing with problems that have been encountered by an organization (March et al., 2000). As organizations learn how to deal with their problems, they add rules to standard operating procedures and, in effect, subtract items from the list of potential problems. Hence rules are describing how to deal with yesterday’s problems, but tell nothing about how to deal with rediscovered problems of today or tomorrow. Implicit in most contemporary discussions about rules is an elementary conception that assumes that actions are translated into histories, history is translated into rules, and rules are translated into actions. The literature on organizations suggests that rules are designed and changed as a result of several processes (March, 1981). However, since rules protect interests, and interest-holding groups
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are interdependent, changing rules is difficult. Rules bundle together technological and social aspects of organizations. Rules stem from the past and seek to stabilize the present and future. The greatest problem with rules is that organizations and their environments change faster than the rules. Any bad rule could once have been good, designed for a situation that no longer exists. When things become different, an attempt to change these tough, invisible threads means that all kinds of practices, bargains, agreements, and payoffs will tumble out of the web and must be stuffed back in again. As a result of these kinds of interdependencies, changes in organizational rules are generally incremental (Perrow, 1979). Brunsson (1989) found organizations to be involved with two somewhat different environments, one environment caring about the rules the organization has and another environment caring about the actions taken by the organization. Elements in the former environment demand proper rules, while elements in the latter environment demand proper and effective action. Parts of organizations wishing to secure a favorable position in either environment learn to be responsive to respective demand. As the two environments normally involve somewhat different groups and are subject to different variations in attention, organizations tends to respond with written rules that satisfy one group and with actions that satisfy another group. Having actions not coincide with the written rules cause a foundation for rule breaking. Hence some actors adhering to one environment will act in accordance with rules, while those actors more keen on producing action would pay less attention to following rules. Lack of precise definitions calls for an operational definition in our study; a rule is made and maintained by an authority, with the purpose of directing behavior, and without official acceptance of deviation (rule breaking). A guideline, on the other hand, differs from a rule in that the authority officially accepts deviation. We will also use a dichotomy of locality; a rule aimed for a specific situation is a specific rule, and one aimed for several situations is a general rule. An example of the former could be a directive regarding project budget issued by management to be applied only in one specific project, while an example of the latter is rules regulating labor working hours. We can expect rules to be communicated in oral form, or they can be documented in writing. Rule breaking, while still following what the breaker subjectively interpreted as the in-
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tended purpose of the broken rule is defined as allegorical rule breaking. We call its dichotomical opposite categorical rule breaking.
Research Method We readily concede the limitation of looking at only written rules, as many important rules in an organization are not written, and many of the rules that are written are loosely connected to actual behavior. Social norms, tacit understanding, standard practice, and rules of thumb are powerful components of a rule-based organization. There are pragmatic and theoretical reasons for our focus on written rules. An obvious pragmatic reason for a focus on written rules is that, for all practical purpose, formal written rules are the only rules that leave clear enough historical traces to be studied in any detail. A theoretical reason for a focus on written rules is that they represent significant parts of modern organizing technology. The focus of this study is project management. If we had focused on creators of rules, we had perhaps heard different stories. The scope of rule application in this study is intraorganizational, regardless to whether the intent of the originator was to apply it as an inter- or intra-organizational standard. The study is based on a holistic multiple case study (Yin, 1994) using interviews as the source of evidence. Based on an earlier study (Norrgren, Ollila, Olsson and Schaller, 1997a; Norrgren, Ollila, Olsson and Schaller, 1997b) including twenty Swedish projects, we examined the results of this study concerning projects management templates and guidelines in order to get indications of presence of frameworks and rules for new product development. Out of the twenty best practice projects we identified seven projects within five Swedish companies (see Table 1) and
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gained access to all of them for carrying out additional research. The main empirical method used in our study was semi-structured interviews with project managers and other significant persons connected to the projects. The reason for interviewing the project manager was that one could expect him/her to have the widest view of the project. We chose also to get more than one person’s perspective, hence making an interview with one other person that played an important role of each project. The interviews were made with one or two interviewees from each project at the time and were always accomplished by two researchers. The interview data was analyzed in a qualitative way, by observing both the presence of general explicit and/or implicit rules as well as the presence of rule breaking. A rule was considered broken if it was not obeyed, using the respondent’s definition and interpretation of the rule.
The Cases The table below gives an overview of some of the background characteristics of the cases used in the study. Project Muscle executed at company Alpha had a mission from the upper management to change a major part in one of the company’s products. A heavyweight project manager (using the terminology of Clark and Wheelwright, 1992) managed the project. He had a long experience from product development projects within the company and did also possess large authority. Normally the department responsible for development of this kind of products would have handled the change works, as well as all external contacts, but they had no resources. Methods and procedures were adopted from a previous project, and
Table 1. Demographics of the studied companies World-wide Name of company
Alpha Beta Gamma Delta Epsilon
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At site Number of employees 80 25 100 1 1
000 000 000 000 000
Number of employees
Number of concurrent NPD projects
5 000 1 500 4 000 10 100
30 35 100 2 5
Name of project
Muscle, Leg Heart Eye, Chest Hand Mouth
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Guidelines and rules
the company stage gate system (terminology of Cooper and Kleinschmidt, 1993) was followed, but they did outsource the work to two external companies, which was not according to the regulations. This led to an unusual development, i.e. that a total concept was bought in from the external companies and the project had to manage the contacts themselves. The project manager admitted that this deviation from the framework was unusual but did not consider it as rule breaking, as he thought that it was a guideline rather than a rule. When asked if the project followed the framework of rules at the company, the project manager answered. ‘‘No one follows the rules by the book, since they are not updated frequently’’. The project manager thought that it was a guideline rather than a rule. Project Leg executed at company Alpha did not have an official mission from the beginning. It was not established by the upper management, but was initiated by one of the business unit managers and was led by an inexperienced project manager, who did not possess much authority. During the first year the project did not follow the mandatory stage gate system. First when the upper management became aware of the project they had to follow the stage gate system. It started at a small scale with a minimized administration and all work was very focused. The result from this was that the product description was made by the project members together with the business unit manager instead of the product-planning department, which had a reputation for raising the ceiling too high with respect to project objectives. The project had very limited resources and all project members had to contribute to the whole picture of what was going to be the final product. The project manager thought that the framework should be considered as rules rather than guidelines Company Alpha has a multi culture regarding obedience of rules. We can see two different behaviors in the two observed projects. One project manager regards the official stage gate framework as a guideline when another project manager regards it as a rule. Project Eye executed at company Gamma had an assignment to develop a new product, which should be integrated into a large system. Though the project manager was inexperienced, he did not adopt the company’s large framework for running a project, but did instead ask the more experienced coworkers participating in the project how they
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used to handle different situations and stages in the project. The reason for not using the framework was that the framework was written many years before, when the situation and the requirements were different. If the framework had been followed in detail it would have been regarded as an obstacle. Project Chest executed at company Gamma had an assignment to develop the hardware for a small version of an existing product within a large system. The project manager was inexperienced and the work was split between two companies within the same company group. Each company had their own framework of rules, somewhat contradictory. The Gamma company had a large framework for how to run a project, but this was quite old (a new one was under development, see project Eye). Hence the project manager tended to rely on the collective wisdom of the more experienced co-workers participating in the project. The Gamma company had a set of values which were considered to be above all other rules in the sense that they, when fulfilled, could serve as an excuse for rule breaking. An example of this was when the project manager had to travel in a hurry and the manager responsible for attesting travels was not present. The project manager made the travel, thus saved lead-time for the project and got the travel attested afterwards. The initiative from a development manager, with a track record of very successful projects, resulted in the development of a new framework, that would better meet contemporary requirements and be more useful for the project managers. The development manager and some project managers participated in the specification of the new framework, but did not follow the work to the end. Instead, the work was performed by a team that became separated from the daily work in any of the projects at the company. Although they had a steering group they very much lived their own life. When the new framework was introduced, four to five years later, none of the initiators recognized any of their most important ideas in the new model. Since the new framework did not fully support the way projects were executed, the project managers still had problems adapting it and were forced to do as they had done before, trust persons more experienced in the actual handling of rules. Project Heart executed at company Beta was considered to be large, even for a company as big as Beta (see Table 1). It was also con-
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sidered unusual regarding the very short time plan. The mission of the project implied that company Beta should cooperate with another company to introduce the product at the same time in different markets. The time plan for company Beta was considerably shorter than they were used to as the partner-company had already done a lot of work. It became obvious for the project management that if the project was to be completed on time the project team could not follow every rule prescribed by the formal framework. The team also understood that they could not break any rules since all rules were formed from legal requirements. Breaking these rules could result in not receiving permission to sell the product in some countries. In order to deal with this problem, the project contacted the framework creators to see if some rules could be changed to fit their needs. The framework creators together with the project team began to rework the project’s needs. A lot of the work was then outsourced to subcontractors, much more than in a normal project. This project also introduced the use of detailed time schedules as instruments of project control, another practice that was not common for company Beta. Another deviation from the norm was that the team did not take notes on a word processor and store them in an electronic database; instead they took the notes on paper and stored them in a folder. This instruction was not changed, hence was considered by the project management to be rule breaking. Actually the rule only said that notes should be taken and stored, it did not say how. The project used the rule creators as a rule roller to adjust the rules so that they would fit the project’s need. But not only was the project gained by that, the whole organization could benefit from the changed rules, which were more applicable to the way NPD is performed today. The project’s use of the framework creators as a rule roller was seen as a very revolutionary step taken by a project within this company. Project Hand executed at company Delta was very important for the company’s survival. The company had not noticed the change in market demand for a new technology for the type of products that they delivered. According to the CEO of the company sales dropped and they lost customers because of their old technology. They realized that the company would not survive more than a couple of years if they did not adopt the new technology. The problem was that their development lead-time for new products used to be much longer than they could afford now.
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At the same time the company was to be ISO9000 certified which implied a rule framework to which the company was not used. The manager for the development department, who was not any friend of general frameworks, decided to do the job himself to ensure that it would benefit the development work instead of hinder it. One example of this manager’s way of working with the implementation of ISO9000 is very well explained by the following quote. ‘‘We participated in a network for small and medium sized companies working with ISO9000. At one of these meeting we should discuss our job descriptions. The other members of the network had huge files of papers containing description, while I only had one half page of a description, and that was for all positions in the company. My description said – we only employ persons able to work without any descriptions of position – which was all right by ISO9000.’’ Besides ISO9000 there were no other rules to be followed, but the time frame limit set by the market. Although there were other projects being performed in parallel to the main project, these had very little priority so the organization could be considered as a single project environment. This project minimized the rule framework to increase flexibility when the circumstances required that.
Single project environment
Project Mouth executed at company Epsilon was assigned by a small company in cooperation with a multi national company and was executed together with a third quite large company. The project manager and the quality manager at company Epsilon, together with the customer designed the framework for this project. Company Epsilon had no general framework but made an individual framework for every new project. When the company was even smaller and the number of projects was limited, it was possible for one single person, acting as quality manager, to be involved in every project to guarantee the quality of the execution. When the company started to grow it became too difficult for one single person to have a personal engagement in every project. Instead of writing a general framework to get control of all projects they divided the quality manager position into three. By doing that, none of the three quality managers had to be involved in all projects but could concentrate on a manageable number of projects, thus being able to have a personal engagement in each of them. By having
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regular meetings the three quality managers could also ensure the conformity within the company.
Analysis The result shows that among the projects some broke some of the general rules (Muscle, Eye, Leg, and Chest), changed the general rules (Heart), minimized the general rules (Hand) or had no general written rules, but project specific rules (Mouth). The reasons differ for each case. Project Muscle managed the work themselves, instead of the development department responsible for the products. By taking the management of the development instead of waiting for the functional unit to make resources available, the project shortened the lead-time. Project Leg didn’t wait for the upper management to authorize the project. Starting the project with no grant from the upper management resulted, according to the project manager, in an early introduction of a new kind of product. Project Eye had an old framework (linear model) that did not adapt to the way projects are run today (concurrent engineering). The project manager ignored the rules from the old framework, and rather trusted the senior designers at the company. Project Chest was executed by two different companies, and had to follow two frameworks that sometimes came in conflict with each other. By trusting in senior designers at the company and discussing with them how to combine the two cultures at the companies a lot of unnecessary work was avoided and the lead-time was kept as short as possible. For both projects at Company Gamma it was stated that the frameworks were to be followed, but they did not, because that
would have hindered them. The first would have been hindered because the framework did not fit the way projects are run today. The other project did not only have an old framework to follow, it also came in conflict with another framework sometimes contradictory to their own. Project Heart used the framework creators as a rule roller, to adjust the rules to fit the project needs. The project did neither follow nor broke the rules. By changing the rules the project did shorten the lead-time of the project. Project Hand minimized the rule framework to increase flexibility when the circumstances required that. By avoiding a lot of rules and large frameworks they never came to be hindered by any rule. Company Epsilon (Project Mouth) found a way to continue with a small-scale project management though they grew big and got a multi project environment. Designing project specific rules together with the customer and the quality assurance manager reduced the risk of any obsolete rule from a general framework to hinder their projects. One could say that they lived by the device small in large.
Discussion Rules are rarely changed, rather broken. Five out of seven cases in this study either broke or bent rules. If the intention behind rules is for them to be followed, not broken, it is essential to understand why. Is it perhaps because of the attributes of new product development as such; members of projects break new ground and cannot be guided by rules designed from past experiences? In all cases where rules were broken or bent, the companies had implemented general rules (e.g. tollgate systems, documentation standards) in order to be successful in project management. In the
Figure 1. Rule breaking, rule making and rule taking in NPD projects
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two cases where rule breaking was not found, the projects faced situated rules. Perhaps project managers tend to regard such organizational politics as bureaucratic resistance (LaNuez and Jermier, 1994); they might resist obeying rules deployed by management functions perceived as ‘alien’ due to lack of project management experience. In support of this hypothesis are findings from the Gamma projects, where project managers apprehended the future version of the revised project management rule and guideline framework, which was perceived as having been designed with little involvement from experienced project managers. These project managers took pride in their engineering background and the engineering culture of their company, and engineers are known to express need for freedom in order to explore and be creative (Badawy, 1971; Kyle´n, 1993). Our findings coincide with Young’s in her research in UK health care (1999); managers demonstrate great versatility in accepting, subverting, reinterpreting, ignoring or hiding rules. Young suggests this behavioral versatility to be the effect of managers’ wishes to be free to choose the appropriate behavior in any given situation; she labels this ‘opportunistic managerialism’. Although it is a leap between health care and new product development, there is a common denominator in these studies – managers and project managers struggling for freedom from bureaucracy. In both studies, managers and project managers were reported to break general rules – in no case of this study did project managers (nor project members) admit to breaking a project specific rule. There might be several reasons for us not noticing such rule breaking; respondents might be more resistant to confessions of ignorance towards steering committees and customer representatives, but perhaps there was less rule breaking of that kind. The project managers of this study clearly showed a greater loyalty to current, specific directives from their managers and customers than to historic, general rules issued by remote, and sometimes unknown, quality assurance managers. There are such findings of loyalty in this study. Project managers of the rule breaking projects confess not to categorical rule breaking, but allegorical. While claiming that the broken rules would have impeded the execution of the project, they try to act according to the perceived intentions behind the broken rule. Project management does not necessarily mind the intentions as such, but the ‘unnecessary pirouettes’ required by the rules. This speaks in favor of a situational approach of rule design, where appropriate levels of
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management influence and control still can be reached. Rules might be redesigned through rule bending; project Heart at company Beta stands out in the study results. Beta acts on a heavily regulated market, where government authorities might revoke the company’s right to sell specific products (or access the market at all) if the documentation of either the product itself or the process of R&D and manufacturing is found to be unsatisfactory. It is understandable that members of project Heart took care following rules, even if this meant they had to act as rule developers themselves. We found no company-specific obstacle preventing the four project managers of projects Muscle, Leg, Eye, and Chest at companies Alpha and Gamma from doing the same thing. If Alpha and Gamma one day would find their market regulated, rule bending might be the chosen strategy for their project managers. Rule bending certainly is a kind of feedback from rule follower to rule creator, a feedback that now is not brought forward in companies Alpha and Gamma (but certainly to the researchers of this study). A project manager at Gamma acknowledged the need for feedback to rule creators of the company, but excused the lack of effort through not having enough ‘energy’. So, why did project Heart attempt, and succeed, in rule bending? Perrow (1979) warned that rule changing might be difficult, due to interdependency of interest-holding groups and that different rules of different age form a tough web. Project Heart managed to align the interests of the different interestholding groups, using top management’s top prioritization and great interest in its success as a motivator for cooperation. Projects lacking such a scarce but powerful motivator may be temped to resign from attempts of rule bending. The projects Hand and Mouth of companies Delta and Epsilon reported neither rule breaking, nor experiences of bad rules. However, at the company level actions had been taken to avoid rules from hindering the execution of NPD projects. Delta minimized the project impact of their ISO 9000 implementation. Other characteristics of Delta, its size and its small number of concurrent NPD projects, might also be of importance when finding explanations for the rule following behavior of its project manager. Epsilon minimized the set of general rules to just one – each project shall be guided by a set of project specific rules. Because of this, all rules were negotiated by project management at the initialization of each project, which might be viewed as a kind of situational rule
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Rules have lives
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bending. The quality assurance managers of Epsilon suggest rules for these negotiations and, in doing so, act as carriers of knowledge between NPD projects from past to future. It is interesting to notice the quality assurance tactics of Epsilon’s management; they aim at hiring a proportional number of quality assurance managers to the number of concurrent new product development projects. One espoused purpose behind these tactics is to make each quality assurance manager keep a fit social network and support mutual social control between quality assurance and project management. Perrow (1979) wrote that rules secure control for the interest owners. Common rules produce this control by standardization. Standardization often reduces variety and thereby the cost of control and would for that reason be preferred by the interest owners as a coordinating mechanism. Results of this study indicate that while the standardization characteristic of general rules transfers the cost of control from interest owners to project management, this will at times be considered an unnecessary burden. However, the rules broken in our study were to a large extent process coordinating. One rule breaking project manager claimed he would seek advice from older, experienced project members rather than trust rules and guidelines; thus (using Mintzberg’s (1979) model of coordination) being in favor of coordination of skills rather than coordination of work. Findings in our study support Brunsson’s (1989) theory of two environments, one rulecaring and one action-caring, where the latter is used by project management for finding support of rule breaking. We found examples of companies where the rule creators are separated from the interest holders of the projects and where these interest holders have given informal authorization for project management to side-step the interests of rule creators. This indicates that rule creators use logic deviant from both project management and interest holders. Allegorical rule breaking in an organization where rule breaking is detected and questioned keeps the breaker alert by forcing him or her to have a good explanation for the rule breaking. One can therefore argue that rule breakers are involved in an authority race against rule creators, a race creating tension but also ingenuity and sharpness. Rule breaking thrives in organizations where rule-caring and action-caring have different owners. Even if our study has given some answers it has given rise to even more questions. Why does it seem that frameworks of rules grow and have lives of their own? If a rule were
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designed to prevent projects from competing for other projects’ resources, what would happen if that rule were broken? To what extent are rule creators aware of the dialectic? What causes are behind good versus poor feedback from rule takers to rule creators? Are the controlling rules of new product development designed to give answers to yesterday’s problems, and what would happen if they were designed to initiate reflection upon the problems of today and tomorrow? More research is needed within the area of standardization and regulation of new product development projects. It seems necessary to further our understanding of how rules for such projects are made and maybe, above all, how they can be changed and developed to fit the needs of non-routine work processes. To conclude our discussion; new product development and rules are not necessarily contradictory. Although this study has identified an ongoing struggle between rulers and ruled, we have also found cases of harmony between them. We argue that these projects has to be guided by context sensitive rules, if both rule following and the serendipity of project execution are to be used as complementary forces in achieving innovation and efficiency.
References Abrahamson, E. (1991) Managerial Fads and Fashions: The Diffusion and Rejection of Innovations. Academy of Management Review, 16, 586–612. Adler, N. (1999) Managing Complex Product Development – Three Approaches. Stockholm School of Economics, Stockholm. Badawy, M. K. (1971) Industrial Scientists and Engineers: Motivational Style Differences. California Management Review 11–16. Bass, B. M. (1990) Bass & Stogdill´s Handbook of Leadership. Free Press, New York. Becker, H. S. (1962) Outsiders: Studies in the Sociology of Deviance. Free Press, New York. Braunerhjelm, P. (1998) Varfo¨r leder inte o¨kade FoU-satsningar till mer ho¨gteknologisk export? (Why doesn’t increased R&D spending increase high-tech export?). Ekonomiska Samfundets Tidskrift, 51, 113–122. Brunsson, N. (1989) The organization of hypocrisy: talk, decisions, and actions in organizations. Wiley, Chichester. Brunsson, N. and Jacobsson, B. (2000) A world of standards. Oxford University Press, Oxford. Clark, K. B. and Wheelwright, S. C. (1992) Organizing and Leading ‘‘Heavyweight’’ Development Teams. California Management Review, 34, 9–29. Collins, D. (2000) Management Fads and Buzzwords: Critical-Practical Perspectives. Routledge, London.
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Cooper, R. G. and Kleinschmidt, E. J. (1993) Stage Gate Systems for New Product Success. Marketing Management, 1. Dahlbom, B. and Mathiassen, L. (1993) Computers in context : the philosophy and practice of systems design. Blackwell, Cambridge. Ekvall, G. (1993) Creativity in Project Work. Creativity and Innovation Management, 2, 17–26. Ekvall, G. (2000) Management and Organizational Philosophies and Practices as Stimulants or Blocks to Creative Behavior: A Study of Engineers. Creativity and Innovations Management, 9, 94–99. Engwall, M. (1995) Jakten pa˚ det effektiva projektet (The hunt for the efficient project). Nerenius & Sante´rius, Stockholm. Fayol, H. (1949) General and industrial management. Pitman, London. Frost, P. J. and Egri, C. P. (1991) The Political Process of Innovation. Organizational Behavior, 13, 229–295. Galbraith, J. (1973) Designing complex organizations. Addison-Wesley, Reading, Mass. Huczynski, A. (1993) Management gurus: what makes them and how to become one. Routledge, London. Kyle´n, S. (1993) Arbetsgrupper med utvecklings- och fo¨ra¨ndringsuppdrag – fra˚n defensiva till offensiva rutiner (workgroups of development and change – from defensive to offensive routines). University of Gothenburg, Go¨teborg. LaNuez, D. and Jermier, J. M. (1994) Sabotage by managers and technocrats: Neglected patterns of resistance at work. In Jermier, J. M., Knights, D. and Nord, W. R. (eds.), Resistance and power in organizations. Routledge, London, pp. 219–251. March, J. G. (1981) Footnotes to organizational change. Administrative Science Quarterly, 26, 563– 577. March, J. G., Schulz, M. and Zhou, X. (2000) The dynamics of rules: change in written organizational codes. Stanford University Press, Stanford. Merriam-Webster (1999) Merriam-Webster OnLine. Mintzberg, H. (1979) The structuring of organizations: a synthesis of the research. Prentice-Hall, Englewood Cliffs, N.J.
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Morgan, G. (1998) Images of Organization. Sage, Thousand Oaks. Norrgren, F., Ollila, S., Olsson, M. and Schaller, J. (1997a) Industriell FoU: Vad utma¨rker Best Practice projekt (Industrial R&D: What is the characteristics of Best Practice projects). IMIT, Go¨teborg. Norrgren, F., Ollila, S., Olsson, M. and Schaller, J. (1997b) Learning and Leadership in Best Practice Product Development Projects. 4th International Product Development Management Conference, Stockholm, Sweden. Oxford, U. P. o. (1999) Concise Oxford Dictionary. Oxford University Press, Oxford. Perrow, C. (1979) Complex organizations: a critical essay. Scott, Foresman, Glenview. Pugh, D. S. (1997) Does Context Determine Form? In Pugh, D. S. (ed.), Organization Theory: Selected Readings. Penguin, London, pp. 16–35. Sandgren, C. (1996) SoU 1996:70: Samverkan mellan ho¨gskolan och na¨ringslivet (Cooperation between universities and industry). Norstedts, Stockholm. Tamm-Hallstro¨m, K. (2000) Kampen fo¨r auktoritet – standardiseringsorganisationer i arbete (In Quest of Authority: Standardisation Organisations at Work). Stockholm School of Economics, Stockholm. Weber, M. (1947) The theory of social and economic organization. Parsons, Talcott, New York. Yin, R. K. (1994) Case study research: design and methods. Sage, Thousand Oaks. Young, A. P. (1999) Rule breaking and a new opportunistic managerialism. Management Decision, 37, 582–588.
Tommi Olin is a manager with Ericsson Microwave Systems and Jan Wickenberg is a manager with AstraZeneca. They are executive doctoral candidates in the FENIX research and executive Ph.D program at Chalmers University of Technology, Goteborg, Sweden and the Stockholm School of Economics.
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Innovation as an Enhancer of Brand Personality: Globalization Experience of Titan Industries Bhaskar Bhat and B. Bowonder Effective management of innovation involves creatively managing the process of creative destruction. For a product like a watch, capturing market share requires the careful enmeshing of brand reputation and innovation. Positioning itself uniquely through a comprehensive visioning exercise, Titan became a market leader. Titan Industries became the most admired brand in selling watches in forty countries. It is a leader in analog watches, designer clocks and branded jewelry. This paper analyzes the experience of interweaving brand reputation, organizational and technological innovation.
Introduction
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Watches are intensely personal
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very brand has a personality associated with it. Innovation drives and sustains this personality in a dynamic way. Innovation has a business logic provided there is a foresight behind it to create, evolve and sustain it and there is a brand to act as its vehicle to customers. Globalization of markets, technologies and products has made it necessary that organizations have to weave innovation and brand reputation delicately to ensure that the customer remains dedicated to the brand. It is not only that innovation is a facet of the brand personality but also it provides dynamism to the brand. Dictums such as ‘innovate or evaporate’ only reinforce the interweaving of brand, customer loyalty and innovation. Schumpeter was the first to indicate that creative destruction through continuous innovation is the essence of corporate success [1]. Because of the prevalence of global competition, innovation as a source of sustained competitive advantage requires a strong corporate culture conducive to creation of innovation and systems that could lead to commercial exploitation of innovations. Effective management of innovation involves creatively managing the process of creative destruction [2]. For a product like a watch, capturing market share requires the careful enmeshing of brand reputation and innovation. Positioning itself uniquely through a comprehensive visioning
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exercise, Titan became a market leader. Titan Industries became the most admired brand in a short span of 14 years. It developed a global brand selling watches in 40 countries covering Europe, Singapore, Middle East, Australia, New Zealand as well as in India. It is a leader in analog watches, designer clocks and branded jewelry. This paper analyzes the experience of interweaving brand reputation and innovation, both organizational and technological. The paper is divided broadly into four sections namely: . . . .
innovation and the watch market evolution of Titan framework for analysis implementing innovation.
Innovation and the watch industry A watch is an intensely personal product. In the 1960s, mechanical watches dominated the market. Introduction of digital and analog electronic watches changed the nature of the market, especially with the entry of Japanese firms. The focus shifted to low margins and higher volumes. The 1970s saw the emergence of analog watches dominated by firms such as Citizen, Seiko and Casio. In India, prior to the start of Titan Industries the major player was a government owned firm HMT Limited, which had a technological collaboration with Citizen of Japan. The majority of watches # Blackwell Publishers Ltd 2001. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.
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manufactured in India, prior to the entry of Titan, were mechanical. Watches and watch components were smuggled into India. Large industrial houses or private sector firms were not allowed to manufacture watches because of the licensing restrictions. The watch market, in India was mostly a sellers market with mechanical watches sold through a limited number of showrooms. The watch market was mostly undersold and underserviced. Microminiaturization and the advent of very large-scale integrated circuits changed the nature of the watch market because of the reduction of prices and increase in volumes. Currently, around 500 million watches are sold across the globe. In the premium range and medium ranges, brands are the differentiators. Over the years, the global watch industry has become brand dominated. This has been partly due to the growth of TV advertising market and the growth of Cable TV. These two co-evolved and this co-evolution has increased the importance of branding of watches. Reciprocally induced evolutionary changes lead to mutual reinforcement of changes i.e. co-evolution of brands and advertising reinforced each other with the emergence of digital convergence. Functionality, value and quality can provide a competitive edge and support the creation of reputation, but it is innovation that drives customer perception of brand richness. A firm has to innovate and this innovativeness has to be communicated through the dynamic aspects of the brand so that the customer could perceive the brand reputation as innovation driven. This has become crucial because of the growth of visual media. All these changes have made is necessary to weave the brand reputation and innovation to dominate the market through a series of measures. The growth of Titan has to be seen in this context of changing industry structure and the emergence of globalization that seeks increased differentiation through brand reputation driven by innovation.
Evolution of Titan Titan Industries Limited started as a joint venture of Tamil Nadu Industrial Development Corporation and Tata Industries Limited, both holding 26 percent. The remaining holding is by the public. Titan decided to focus on analog watches, though the Government of India suggested that the company should continue to manufacture mechanical watches. The vision of Titan was to build a brand with watches similar to that available in the global market. Everything was done with this vision
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in the background. The strategy was to focus on brand marketing rather than on product marketing. Long term profitability comes from brand reputation. In India, most of the firms had not built any brand, as it requires a strong corporate ambition and commitment. Since the focus was on medium prized branded watches as well as global orientation, Titan decided to go in for the state of the art manufacturing facilities so that they could go global. Prior to the market entry, Titan analyzed buying preferences, market trends, technology trends, manufacturing options and strategies of global players. The first requirement for becoming a strategic innovator is to identify gaps before everybody else does [3]. Watches were considered a functional product simply for telling the time, before the entry of Titan. Titan’s first innovation was to change the nature of the Indian watch market using ‘concept marketing’ rather than product marketing. Watches have to be sold as personal products and not as a time product, so that brand name and reputation can be leveraged. Before that time, Indian watch companies did not make much use of advertising. Prior to the initiation of economic liberalization in 1991 India was a protected market and advertising played only a limited role. Titan used concept marketing to effectively change the mindset of the Indian customers who mostly had a single watch. This was achieved through a meticulously planned and a well orchestrated advertising strategy. The focus first was on medium range market delivered through exclusive showrooms along with a chain of retail outlets. After building volumes Titan moved to become a global player. The growth of sales since its inception is given in Figure 1 indicating that it experienced a positive growth every year.
Framework for analysis The framework used in this analysis is to identify the manner in which Titan has used innovations, both technological and organizational innovations to become the market leader. The value chain framework proposed by Porter is used for conceptualizing the business [4]. The process of creating value by Titan in each aspect of the value chain has been identified. It increased its market share of electronic analog watches, even though global players like Citizen, Swatch and Timex are operating in the Indian market. Titan progressively evolved its global operations. Strategies used in each element of the value chain for leveraging value have been identified.
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Figure 1. Growth Trends of Titan
Figure 2. Synergy from Innovations
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The main elements that make Titan an interesting firm for the detailed study are . The only branded watch to originate from
a newly industrializing country . The brand leader in the country of its
origin . The only brand that has both watch and
jewelry in its product portfolio, from a newly industrializing country . The company become the best brand in a short time frame overtaking older players . It has the broadest range of watches. Titan has used judiciously a combination of organizational and technological innovations, as indicated in Figure 2. In all the elements of the value chain, it has used innovative approaches. The major elements include . . . . . .
conceptualization design operation logistics marketing and service and support.
It is not that other firms have not used some of these, but Titan has been able to do it rapidly and in an integrated manner, though it had no historical knowledge in brand building or global market creation. It evolved using inputs from a comprehensive analysis
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of the market dynamics, rapid learning and rapid adaptation to the ever-changing market conditions. These aspects are examined in detail subsequently. An overview of their approach is shown in Figure 3. Vision, technology development, brands building, procurement and human resource development initiatives go across the value chains and they reinforce mutually. In every aspect of the value chain, starting from conceptualization, Titan used innovative approaches to become the market leader as shown in Figure 3. Titan envisages a business model in which value is created for customers through innovation. Innovation leads to differentiation, cost leadership, segmentation and superior reach as shown in Figure 4. This led to competitive advantage providing value to investors through superior financial performance.
Idea conceptualization Titan started the company with a group of executives with rich but varied experiences. The Managing Director came from the Tata Group. He selected a team of professional executives with extensive experience in watch manufacturing and executives with marketing experience specifically in retailing. He envisioned an organization with two strong
Figure 3. Innovation at Titan
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Figure 4. Value for Customers and Investors
complementary and integrated competences, namely: . design and manufacturing competence and . marketing competence.
The entry point was the medium range market that was large enough to handle but at the same time the one that has high growth potential so that people could perceive the richness of the product. The innovativeness of Titan came from the correct targeting of the market and quick segmentation thereby succeeding in the market place. Initially it was considered a difficult option to compete against the lead firm that had a strong collaborator and a strong horological laboratory. Titan started with a detailed assessment of the Indian and global watch industry. To this end, the first initiative was to examine why Indians prefered watches made abroad. A detailed analysis was done to examine the major gaps in terms of service, styling, retail reach, show room interiors, capability of franchisees, and attitude of retailers to customers. A company to be innovative must have an external world view [5]. Through a series of detailed ground level assessment studies, carried out at many locations Titan understood the market operations thoroughly especially in the various segments of the Indian market. This was a done through a meticulously designed assessment carried out by a
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small top team. These assessments were both precise and reliable at the same time objective. Such a meticulous study was not done prior to the market entry by any of the public sector or private sector players in India. This integrated assessment prior to the entry gave Titan rich insights into the nature of the market, the competitor offerings, the customer preferences as well as the gaps in demand. This helped Titan to conceptualize the vision and realize it. The vision was a combination of analysis and imagination. The main weakness of the Indian watch market was that no brand had a strong personality. Titan used this idea as its starting point for building the brand personality and this was the crux of the vision. The vision was driven by a futuristic mindset, contextual insight and business foresight as shown in Figure 5. The elements that drove the vision are also highlighted in Figure 5. It has been reported that visionary companies outlasted and outperformed non-visionary ones [6]. The leadership at Titan provided the vision and the required entrepreneurial spirit. By breaking the rules of the game and thinking of new ways to compete, a company can strategically redefine its business and catch its bigger competitors off guard [5]. Though the company that was transferring initial know-how to Titan proposed a low level of automation, the top team of Titan saw
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Figure 5. Elements of the Vision
no wisdom in such an option. The team felt that if Titan were to become a global brand it had to position itself as a premium brand. This insight came after the analysis of the market, understanding customer preferences and analyzing the operation of various brands currently in vogue. To sustain a premium brand the volumes have to be large hence the focus has to be premium brands and volume creation. While Titan was planning to enter the market, the share of analog watches in India was only 5 percent. Titan decided to target the analog watch market as it will be the high opportunity segment. The first thing Titan did was to initiate a sharply defined innovative advertising campaign to create and position the brand. Colour TV came to major cities in India only in 1982 and advertising was limited to fast moving consumer goods. The focus of the innovative campaign of Titan was to convert the perception of watch as a ‘telling the time product’ into a ‘personal product’. This transformation of the mindset of the customers who were not used to a variety of styles was a clearly orchestrated ‘concept marketing’ strategy as Titan or any other Indian company had no experience in creating a brand for a personal product. Titan worked closely with the advertisers. It carefully assessed the feed-
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back and refined the strategy, as it could not afford the risk of failure. A careful analysis supported by imagination along with creative advertising can make the difference. Titan as a fast mover has to minimize failure through meticulous planning and systematic conceptualization of every strategic move. ‘Doing it right the first time’ was the essence of its strategy. A clear vision and the roadmap to realize it were prepared. The initial emphasis was on cross-functional integration of creative ideas followed by reduction in product realization cycle time. The open management culture at Titan supported innovation in all elements of the value chain during the idea conceptualization phase. Titan focussed on both aspects of the vision namely the hard aspects and soft aspects [7]. Hard aspects involve systems, facilities, roles etc. and soft aspects signify motivation, participation, openness, involvement and interactions. The leadership of Titan meshed both hard and soft aspects through a unique management culture that is supportive of innovation. Culture is a pattern of shared assumptions invented, discovered or developed by a given group [6]. The supportive culture is a critical factor that can nurture innovation. A supportive culture along with systems sustains the innovative spirit leading
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Figure 6. Support Systems for Innovation
to a continuous creation of new ideas leading to the realization of the vision as shown in Figure 6. Persuading people to promote new ideas requires an atmosphere of receptive freedom, a willingness to reward a good innovation and some kind of downside risk cushion [5].
Design and manufacturing
Titan and quality
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Titan considered that the watches it makes should have to be distinct in appearance and style. Firstly, it decided to introduce more models compared to the competitor having the highest market share, and initial target was 5 to 10 times the number that was introduced by the lead competitor. For this, Titan used a variety of strategies. Initially the new product ideas came from the marketing group. Subsequently as variety became the differentiator, a state of the art design studio was set up. It used inputs from European designers to derive a distinctly Indian style by combining Indian and European ideas. The design group evolved as the company grew and marketing personnel became customer focussed. As competition intensified, the competitive differentiation came from richness of design. This became the vehicle of creating the brand personality using ideas from designers and marketers collectively. This was sustained through networking into the world of design. State of the art software and computer aided design algorithms were
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procured and used for new model realization. The learning occurred rapidly and Titan captured the market due to its competence for delivering models that are elegant and rich in style. Richness got enhanced as the brand reputation was built. This lead to the mutual reinforcement. As one can observe from Figure 7, the number of new models increased considerably as reputation was enhanced. This created a virtuous cycle. Reputation leads to demand for variety and variety creation leads to enhancement of reputation. Organizational innovation involves creation of virtuous cycles. The second strategy that was set was to have minimum return of watches due to quality problems during the warranty period. Returns during this period are non-valueadded transactions. From day one quality was the central theme at Titan. It used benchmarking to set its quality norms. Benchmarking helped Titan to set realistic targets for implementing innovative initiatives. Quality and product richness helped Titan to export watches to the other markets. Titan took a calculated risk and entered the Middle East market since it is culturally akin to the Indian market. A detailed analysis of the global watch technology trends indicated that if quality has to improve two special innovations are essential. The ambient dust levels are high in India. Developing a high torque stepper motor that could withstand a high level of ambient dust became the first technological
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Figure 7. New Product Introduction
innovation initiative. This motor was developed and the project was successfully implemented. This led to a sharp increase in performance and also it led to a low level of incidence of quality problems. This showed that gap analysis or customer requirements analysis, an innovation receptive mindset and a good organizational interaction process could be a major trigger for innovation. India, being a tropical country, has a humid climate. Conventional gold plating tends to peel-off. Titan analyzed this problem, as buyers of watches in developing countries tend to use watch for a longer period. Titan decided to go in for vapour deposition technology in vacuum for watch cases instead of gold plating so that gold finishes have a longer user life. Besides, vapour deposition is an environmentally benign technology. Both these innovations helped Titan to enhance its brand reputation. Titan was able to increase the sales and its customer acceptance due to these three innovative initiatives, namely: . large range of styles in a short time frame
using a variety of designs . high torque stepper motors . durable finishes using vacuum deposition
technology for watch cases. In a short time, it became the market leader in India through its rich offerings and elegant
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styles along with its reach supported by brand and retail network. Richness of product and rapid increase in reach of its product through the retail network were simultaneously used to become the leader. Richness without reach and reach without richness would not have given Titan the synergy from its design and manufacturing excellence and the excellent retail reach.
Brand reputation Indian companies did not have any inclination for brand building in most of the categories prior to the initiation of the economic liberalization process in 1991. Brands were used mostly in the fast moving consumer goods segment. Titan started a brand building exercise using a combination of print and TV media that no other Indian brand had ever attempted. High levels of quality of the product and rich styles reinforced the advertisement campaign of Titan. Though the competitors responded, they could not match the agility and creative domination of Titan. Titan introduced styles that are complementary to the current fashions, especially among the fashion-oriented customers and youth. Elegant styles, model variety, innovations and brand reputation reinforced the customer appeal. Innovation management at
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Titan involved interweaving of product richness and brand reputation. Elegance, aesthetics and styling are more intangible than a product per se. Making customers perceive the richness, and communicating this richness through subtle advertisements, were considered a revolution by fashion circles in Europe. Titan initially entered the market through four ranges. As brand reputation got enhanced it captured value by moving into upper ranges. As volumes increased it came into lower ranges and captured that as well. This strategy is shown in Figure 8. Through this, Titan created an inimitable competitive advantage along with creating new market segments. Some observations by European fashion magazines reinforce this assessment. Multiple ownership became the order of the day and competitors lost market share sharply. This was achieved simultaneously by increasing models and reducing new product development cycle time. Titan became the most admired consumer durable brand in 1995, according to A&M-ORG Survey. Further, it became the top Indian brand in 1999, according to Economic Times-ORG-MARG Survey among all the product categories. This was the youngest brand to reach the top in a short time span. Along with brand building it used a marketing strategy that involved a combination of product and service richness
1980s
along with product reach. Reputation is the most important commercial mechanism for conveying information to consumers. Reputation is a superior asset but is not easy to create. Reputation building results in creation of an inimitable and intangible asset that cannot be easily copied or taken away unlike other aspects. Entrepreneurial rents are normally self destructive as firms can improve and become late entrants. Brand reputation minimizes the risk of imitation thereby allowing sustainability of a brand. Reputational capital helped Titan to retain its leadership even after the entry of global competitors such as Citizen, Seiko and Swatch into the India market.
Reaching the customers Richness of style has to be matched with the reach of the brand if a firm has to derive maximum benefit from its brand reputation. Prior to the entry of Titan, watches were sold in small and poorly displayed showrooms. The first strategy used by Titan was to change the mindset of the customer. Titan located exclusive outlets in the best commercial locations in major cities as well as in smaller cities at a fast pace that no other competitor could match. This changed the complexion of
1990s
Figure 8. Brand Expansion of Titan
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watch marketing in India. Titan rewrote the rules of competition and became the industry standard. The innovativeness of Titan came from novelty of approach as well as the speed that made it difficult for the competitors to respond to. Titan became the first watch firm to start exclusive showrooms in India in many centers. As writings on the Chinese art of war have indicated, speed and surprise are the crux of successful competitive strategy [8]. The second strategy was to increase the spread by increasing the number of showrooms from where Titan watches could be purchased, thereby expanding the reach. Titan used speed as the strategy and competitors again could not respond. The increase in reach helped Titan to increase its volume. The increase in reach was done mainly through increasing the coverage of retail outlets to reach as many as 6000 locations. This is approximately 10 times the number of outlets the lead competitor has. This was heralded as a retail revolution next only to that of batteries. The retail revolution supported by the strong brand reputation and rich variety helped Titan to enhance the brand image and maintain the brand supremacy. One of the major elements of organizational innovation has been to reduce the new product design cycle time. Short cycle time helps in responding to changing customer needs and also helps in surprising competitors. Through the use of visualization, design automation, concurrent engineering and rapid test marketing
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Titan reduced the design cycle time as shown in Figure 9. This helped Titan to reduce the response time thereby enhancing the brand personality. Due to this, 50 percent of sales came from designs that are less than three years old. This enhanced the reputational capital of Titan. Another innovation that was introduced was to start ‘watch supermarkets’ called ‘Timezones’ for multiple brand delivery. In these outlets, all the major brands including that of the competitors are sold, but a minimum of 60 percent shelf space was for Titan. This again was a unique organizational innovation. Titan ensured service quality in these outlets and these outlets became the defacto industry standard for service excellence. Selling Titan watches and that of competitors in the same outlets helped the customers to make on the spot comparisons before they made purchase decisions as 25–30% of customers are brand undecided. This strategy also helped Titan to increase the market share by targeting customers who have had no specific brand preference. ‘Timezones’ helped in swaying customers towards Titan brand through its rich offerings and specially designed displays. Titan educated retailers in improving their displays and in enhancing the ambience. This special training paid rich dividend to Titan by enhancing the perception of the brand richness. Titan used mostly new dealers and molding the mindset of the dealers was achieved through intensive
Multiple brand delivery
Years
Figure 9. Design Cycle Time
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training. These along with the rich styles, brand reputation and good service helped Titan in increasing its market share over the years. Through these, Titan elevated itself its status to that of a fashion product. This was a concept innovation. Fashion products provide for higher margins as customer perceive them differently by giving an intangible value. At the same time sustaining a premium appeal requires constant efforts and continued brand reinforcement. Innovation and short design cycle time helped Titan to sustain its fashion appeal.
Service excellence Sustainability of brand reputation comes from service excellence. Good brands could lose reputation if they are not supported by a commensurate reputation in service delivery. Service excellence again has two dimensions to support it, namely service excellence and service reach in terms of service network. Service excellence cannot be achieved through the exclusive use of any of these dimensions. The customers’ perception is a combined product of excellence in service delivery and access to the service. Designing a strategy that can sustain reputation thus requires quality of service and its availability in physical terms. Titan clearly recognized the fact that products like watches require an excellent service network. Titan used innovative ways of improving the service and making a difference. A vital component of customer focus is providing an integrated experience [9]. Titan used a three pronged strategy for this. First, it trained its service personnel to have a good attitude to customers when they come to its service centres, so that problems are handled in a customer friendly atmosphere. Secondly, Titan started ‘‘Titan watch care centers’’ in major user areas. These exclusive front office service centers provide quality service with a very short response time. This again was an industry-first innovation achieved by Titan. Thirdly, Titan started spare parts centres in major locations to improve parts logistics. The service attitude, the service focus and the service support became the basis of service excellence. This helped Titan to build up customer capital. Customer capital reinforced by structural capital becomes a distinct brand identity. Competitive advantage of Titan came from its combined use of brand reputation, retail network, service excellence combined with its service knowledge. Importance of reputation can be seen in those products to which product quality can be identified through long term excellence. In this respect
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watch differs from fashion products such as ties and requires a higher level of service. Through service excellence, it targeted enhancement of customer loyalty leading to customer retention. This resulted in multiple watch purchases by individuals because of the fashion appeal. Customer equity [10] emanates from value equity, brand equity and retention equity. Value came from service, and brand equity came from aesthetics, reputation, and variety. Retention equity came from fashion appeal and service reach. Titan, thus, evolved a business model that others found difficult to replicate.
Brand extension Brand extension helps a firm to derive economies of scope. It also has the advantage of high appropriability of the brand reputation. Brand extension in complementary markets can help a firm to derive value from its market knowledge and the dealer network. Brand extension essentially helps a firm to leverage its accumulated knowledge as well as customer capital, by extending the reputation established in one market to another one. The essence is basically leveraging reputation in multiple markets leading to scope economies. Titan extended its reputational boundaries and developed new segments of business. These include segments such as clocks, jewelry and precision meters for automobiles through intensive innovation. Titan became the first Indian supplier to supply speedometers for Ford cars. Creative ideas, creative visualization and creative realization require strong cross-functional knowledge flow systems as well as strong organizational support systems and a conducive climate. Titan started a strong Total Quality Management initiative encompassing design, engineering, manufacturing, logistics and service support, so that it could extend the excellence it had achieved in watches to other products of Titan as well. Though it took a little more time for building reputation in the jewelry market, as India did not have a branded jewelry market, it has been able to grow in that segment using its brand reputation. The initial slow growth was due to the fact that India had no branded jewelry market. It repeated its performance in the premium watch market in the jewelry segment. The designer clock it has introduced has become one of the preferred items for corporate gifts; it is equally successful with its jewelry for weddings. Brand extension is a delicate exercise, as it should provide synergy and should not lead to cross messaging. This
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has been done in such a way that reputational and customer capital have been mutually reinforced.
Globalization Not many products branded in India are sold in global markets. Titan became one of the first brands in the non-consumer goods segment from India to be sold in Middle East, East Asia as well as Europe. Globalization of brands needs a well-conceived strategy, as it requires a thorough understanding of the cultural settings, especially for personal products like watches in which the distinctions are both subtle and difficult to perceive easily. No major branded products from newly industrialized countries are generally seen in major European markets. Through a well-coordinated system, Titan was able to capture customer requirements in other cultural settings and design products and repeat its performance. This required training and skill development in cross-cultural marketing as shown in Figure 2. For expanding into global markets it used an incremental approach supported by rapid learning and review. The growth was initially in selected markets and as networks got established it has been able to extend its market reach. This again was possible through rapid learning and rapid adaptation to changing requirements in new markets. Regular interaction and systematic analysis of feedback was the inherent drivers of agility. Constant monitoring was done such that there was no failure. For innovations to flourish, organizations need to have continuous communication, dialogue-based goal setting and fear-free feedback. Globalization was possible since that was ingrained in the vision of Titan at the conceptualization stage. Continuous scanning of market trends, rapid learning and quick adaptation to changes made Titan a unique firm to establish global presence in a short span of time of ten years that too in a highly competitive segment in which it had no prior experience.
Implementing innovation Implementing innovation is an art rather than science. Strategic innovation has to bestow to the firm a variety of advantages. First, the strategies should lead to inimitability of strategic options. The inimitability has to come from certain tacit knowledge elements or it has to come from embedded organizational processes. Second, innovation should enable a firm to retain superiority in the
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market place. Third, strategic innovation should allow a firm to pursue strategic options without loosing its flexibility. Fourth, the options pursued should lead to durable benefits [11]. Lastly, the strategic options an innovation provides should lead to sustainable competitive advantage. In the case of Titan, inimitability came from its agility and openness to change. Superiority came from its product richness. Flexibility came from its alliance relationships, cross-functional teaming and design automation. Durability of strategic advantages came from its innovative approach to extend the reach to all major customer centers through the ‘watch supermarket’ concept. Sustainability came from its superior brand reputation. The basic reason for all this has been the knowledge-based approach to the creation of intellectual capital namely reputational capital, customer capital, human capital and structural capital in a mutually reinforcing manner such that knowledge leveraging, innovation and reputation are nested through a set of appropriate organizational processes, as shown in Figure 10. This was possible because of the strong support for innovation rooted in an open culture blended with rich experience. The whole approach was evolutionary. The timing of entry of Titan was also perfect, as Indian retailing was slowly becoming brand driven due to the advent of cable TV and the economic liberalization process. Titan provided the leadership for this co-evolution. Titan was able to create the reputation because of the ‘Tata’ culture known for its quality. The creation of brand personality of Titan is an exercise in which brand building, retailing and innovation was enmeshed elegantly supported by cognitive knowledge, customer knowledge and tacit knowledge. The success of Titan has been due to its ability to make customer perceive it as a reputed brand and sustain this reputation through excellence in service delivery, excellence in product range, excellence in creative advertising and excellence in cross functional coordination and this was achieved in an evolutionary manner as shown in Figure 11. The real lesson one can get from Titan is that reputation provides for sustainable competitive advantage if it is dynamically renewed across the business value chains. Every brand has a personality of its own. Creating and evolving this personality is through blending of innovation and brand reputation. This is facilitated by the foresight exercise followed by knowledge integration involving customer knowledge, tacit knowledge and cognitive knowledge leading to sustainable competitive advantage. Communicating the brand personality and
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Figure 10. Relationships Among Innovation, Reputation and Knowledge
Figure 11. The Evolutionary Growth Model of Titan
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creating reputation driven by innovation is the essence of the strategy of Titan. As the ‘personality metaphor’ indicates, a personality is unique and evolutionary. Co-evolved personalities have a high degree of sustainability.
References 1. Schumpeter, J. (1947) Capitalism, Socialism and Democracy, Harvard University Press, Boston. 2. Shanklin, W. L. (2000) Creatively managing for creative destruction, Business Horizons, 43(6), pp. 29–35. 3. Markides, C. (2000) Stategic Innovation, Sloan Management Review, 38(3), pp. 9–23. 4. Porter, M. E. (1985) Competitive Advantage, Free Press, New York. 5. McCosh, A. M., Smart, A. U., Barrar, P. R. N. and Lloyd, A. D. (1998) Proven methods for innovation management, Creativity and Innovation Management, 7(4), pp. 175–192. 6. Rickards, T. (1999) Creativity and Management of Change, Basil Blackwell, Oxford.
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7. Bessant, J. Technology management, UNIDO, Vienna 8. McNielly, M. (1996) Sun Tzu and the Art of Business, Oxford University Press, Oxford. 9. Vandermerwe, S. (2000) Increasing value to customers improves business results, Sloan Management Review, 42(1), pp. 27–37. 10. Rust, R. T., Zeithaml, V. A. and Lemon, K. N. (2000) Driving Customer Equity, Free Press, New York. 11. Collins, D. J. and Montgomery, C. A. (1999) Competing on Resources: Strategy in the 1990s (Ed. M. H. Zack), Knowledge and Strategy, Butterworth – Heinemann, Boston, pp. 25–40.
Mr Bhaskar Bhat, B.Tech, MBA is Deputy Managing Director of Titan Industries Ltd. Dr B Bowonder is Dean of Research, ITC Chair Professor on Strategic Management of Technology, Chairman Centre for Energy, Environment & Technology, Administrative Staff College of India, Hyderabad, India
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Strategic Decision-making in a New Millennium: The Contribution from Hybrid Decision-making Modes Frederick B. Hsu Empirical studies have provided scope for examining strategic decision-making behaviours under a range of conditions including those involving environmental ‘jolts’ to expectations, and multiple-decision activities. Effective decision-making under turbulent conditions repeatedly involved a hybrid of rational and cybernetic (or experimental informationseeking) behaviours. This was unpredicted. We have labelled this new mode Promethean rationality. A second hybrid mode was identified, under a more restricted range of conditions, and characterised as Confucian rationality combining rationality with appeal to ‘expert knowledge’. Inspection of a real-life decision making case under an environmental jolt revealed preliminary evidence of Promethean rationality. The implications are the more valuable as in the rise of a new century, the environment around decision makers becomes more turbulent. Key words: Strategic decision-making, rationality, promethean rationality, turbulence
Introduction
A
Rationality and environmental turbulence
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new, turbulent era demands new lenses for inspecting strategic decision behaviours. Since the 1980s, increasingly turbulent business environments have gained the attention of researchers and famous writers (e.g., Huber and Daft, 1987; Kanter, 1983; McConkey, 1988; Tushman and Romanelli, 1985). Studies of strategic decision making have also recognised turbulent conditions as critical terrain within which decision makers should focus on effective decision processes so that organisational performance can be secured (e.g., Bourgeois and Eisenhardt, 1988; Eisenhardt, 1989a; Fredrickson, 1983, 1984; Fredrickson and Iaquinto, 1989). A continued need to address the old questions of rationality, under conditions faced by contemporary strategic decision-makers, is still seen across a range of literature (e.g., Papadakis, Lioukas, and Chambers, 1998; Priem, Rasheed and Kotulic, 1995). Earlier, the work of Simon, and co-workers (Simon, 1952, 1955, 1957, 1979, 1986; Cyert and March, 1992; March and Simon, 1958) established the concept of a limited capacity or bounded rationality that remains a powerful innovative contribution to management
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studies. Yet, the ghost of pure unbounded rationality has never been completely exorcised (e.g., Dean and Sharfman, 1993; Eisenhardt, 1989a; Fredrickson, 1983; Hart, 1992; Lord and Maher, 1990). Simon (1960, 1965), as so often, anticipated the core issue. He reasoned that enhancing bounded rationality in decision-making would increase organisational performance. It was left to Fredrickson and his colleague (Fredrickson, 1984; Fredrickson and Mitchell, 1984) to attempt the first micro-economic studies of the relationship between economic effectiveness, strategic rationality, and environmental turbulence. Fredrickson chose to operationalize the rationality of decision-makers through evidence collected of the comprehensiveness of their search processes. This approach in effect gives an estimate of the boundedness of rationality. However, rationality is such a high level construct that its operationalization inevitably leads to differing resolution from differing research traditions. The sharpest conflict seems to be found in the claims for bounded rationality under turbulent conditions (e.g., Glick, Miller and Huber, 1993). The methodology pioneered by Fredrickson and co-workers led to a discovery that increases in rationality # Blackwell Publishers Ltd 2001. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.
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were associated with decreases in corporate performance under environmental turbulence (Fredrickson, 1984; Fredrickson & Iaquinto, 1987, 1989; Fredrickson & Mitchell, 1984). On the other hand, subsequent researchers (Glick, Miller & Huber, 1993; Hart and Banbury, 1994; Priem, Rasheed and Kotulic, 1995) reported that under environmental turbulence a strategic posture that increases rationality appeared to lead to an increase in corporate performance. The seemingly conflicting findings seem to have emerged based on a core set of shared and often implicit assumptions. Thus, there seems acceptance that an effective rational strategic decision process (sometimes defined carefully, sometimes not so carefully) exists, the effectiveness of which varies according to circumstances. One model by Lord and Maher (1984) indicates a way of reconciling the conflict. The model encompasses differing possibilities in strategic decision making modes. These possibilities were represented by four modes: ‘pure’ rational, limited capacity (boundedrational), experimental (or referred to as cybernetic), and expert. The introduction of the four decision making modes is of itself an integration of earlier work (e.g. Simon, 1957, 1979; March & Simon, 1958; Kleinmuntz & Thomas, 1987). However, Lord and Maher in addition suggested the possibility of a combination or hybrid mode considered effective under non-turbulent circumstances. The specific hybrid mode regards a combination of expert and cybernetic modes. We regard the notion of hybrid strategic modes as offering profound implications regarding the essential nature of the strategic processes, and regarding the methodologies appropriate for our empirical examination reported in this paper. We do not seek to examine the full richness of the Lord and Maher analysis in this paper. However, we do think the work by Lord and Maher presented a significant contribution that serves as a point of departure from earlier studies of strategic decision making processes. This is due to the notion of hybrid decision making modes, and their processual views on decision processes. Additionally, the work confronts us with new research challenges. How might the claims of Lord and Maher be studied and expanded? Might other hybrid modes of decision-making exist and offer effectiveness benefits, and if so under what conditions? The questions directed us to consider designs in which a small number of decision-making groups conducted multiple decisions over time, and under conditions when turbulence might vary.
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Methods The research question Our research question derived from the above exploration of literature can be framed as follows: ‘under conditions of environmental turbulence, what might the relationships be among rationality, alternative strategic modalities, and strategic effectiveness?’
Approach We followed an approach consistent with the exploratory nature of the investigation. An examination of the literature was directed towards establishing some provisional conceptual contributions and boundaries. Access to strategic decision activities was seized on the principle of procuring as wide a range of samples as possible. Patterns of strategic decision making within the pilot studies began from prevailing literature themes as starting points for the development of empirically grounded constructs (Eisenhardt, 1989b; Glaser & Strauss, 1970; Miles and Huberman, 1994; Brown and Eisenhardt, 1997). The research investigation was accommodated within an on-going series of projects within an international Business School.
Operational definitions Rationality in decision making processes. Operationalising rationality is a challenge we faced in this study. Rationality is such a high-level construct that it has invited various approaches for its operationalisation. For example, Fredrickson (1983, 1984), and Eisenhardt (1989a; see also Judge and Miller, 1991) have proposed differing operationalisations of rationality. For the sake of rational comprehensiveness in our data collection, we decided to operationalise rationality by considering comprehensiveness of search as an empirical indicator of decision rationality. That is to say, we will seek contrasts between strategic search processes of higher and lower observed levels of comprehensiveness. On the behavioural level, we would identify activities related to information search and analysis or calculation as related to rationality. We would further develop instruments to ask our research samples to report their perceived rationality of decision-making activities. Expertness in decision making processes. We would seek to observe decision makers’ use of intuition, or inclination to turn to an expert-like figure for his/her arbitration regarding a best possible course of action.
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Promethean rationality
Cyberneticness in decision making processes. We would seek to observe decision makers’ trial-and-error behaviours. Turbulence. Within an environment we will define turbulence as a disruption to the environmental stability or regularity associated with one (or more) identifiable external ‘jolts’ (discontinuities). This turbulence would, hopefully, lead to a measurable shift in strategic decision-making behaviours. This is a point of departure from earlier efforts in exploring the relationship between strategic decision modalities and corporate performance (e.g., Dean & Sharfman, 1996; Fredrickson, 1984; Miller & Friesen, 1983). In these efforts, environmental turbulence is an industry-level concept signifying perceived characteristics of an industrial environment. Here we followed the environmental concept developed in the catastrophe theory. Turbulence turns out a jolt under which changes of decision making behaviours were hoped to be observed. Promethean decision-making process (Promethean rationality). In this study we report only on binary hybrids. Promethean decision making process refers to a hybrid mode of decision-making as a multi-faceted pattern of decision-making that can not be split into simpler modalities for purposes of analysing causal relationships. It is the binary decisionmaking hybrid of rational and cybernetic components, whose interactions become manifest over time. The nature of the hybrid is explored, taking a processual view of timedependent phenomena. Confucian decision-making process (Confucian rationality): The binary decision-making hybrid of rational and expert components. Effectiveness was taken to be a strategy directly contributing to the successful completion of the task.
The proposed experimental design A three-stage design was planned for eliciting the decision modes and assessing their effectiveness. Stage one involved exploratory studies within which methodology and instrumentation were refined within a range of decision tasks, and a range of decision modes identified experimentally, drawing on the earlier proposal of Lord and Maher. Stage two involved a study under controlled conditions of multiple decisions. Stage three applied the emergent knowledge derived in stages one and two to real life decision situations. In stages one and two, access was secured to an entire population of managers and putative managers engaged in decision-making activities while undergoing courses within a
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Business School, within a two year time period. Although this represents a convenience sample, it captured a wide range of tasks, mediating influences, and decisionmaker’s backgrounds and experiences. Eight opportunities (different samples) were taken to study decisions for a pilot study. These included full time MBAs; part-time MBAs; and Executives and Owners of Small-Medium Businesses (SMEs). Data from a total of 124 tasks were obtained. The tasks involved were: P1 Coin Estimation: Estimate of coinage held by participants in the room P2 Change Vending Decision: ‘Would a change vending machine be a good idea?’ A follow-up for the Coin Estimation task P3 Decision modelling: Teams reflect on their decision behaviours on the Change Vending Decision P4 Creativity rating: Teams decide on creative achievements of given industries P5 Case study: Teams tackle a jolt to a researcher described in a case P6 Client-based strategy development: Teams work on a ‘real’ strategic issue provided by one team member P7 Client-based creative development: Teams work on a general issue to suggest creative changes using a methodology provided in the course P8 Jigsaw puzzling: Teams tackle a task with a designed ‘jolt’ (unexpected reframing is needed to resolve the puzzle) Four major opportunities were identified for studies of a longitudinal kind, involving multiple decisions. Two of these involved teams of experienced managers, primarily from large international organisations. The other two opportunities arose with the MBA courses of the kinds participating in the pilot decision-studies. Three hundred and thirty usable self-report inventories were collected from all participants. Several of the various studies in stage one had ‘designed-in’ environmental jolts. That is to say, we were able to ensure a priori that we would have access to teams experiencing environmental ‘jolts’. A particularly rich opportunity came from P8, the jigsaw puzzle task. Each team had the strategic goal of completing the jigsaw. However, the jigsaw had some version of an abnormal design (for example, all the straight pieces might lie inside rather than outside the perimeter of the jigsaw). Thus, on each of its multiple trials, the group inevitably encountered a ‘jolt’ to its strategic plan when attempts were
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made to put the plan into action. P5 permitted role play in a case study which forced the teams to reconsider the ‘obvious’ means of dealing with a strategic problem (a discovery fails to ‘work’ shortly before a major presentation of its merits). However, other of the trials offered the promise of ‘jolts’, but with no easy guarantee of when or of what specific kind. For example, the real-life projects had clients sometimes rejecting a proposal, other times accepting a proposal. In a similar fashion, we had sufficient prior experience with the multiple decision training events to anticipate some ‘jolts’ permitting studies under turbulent conditions. However, for these studies, we had no means of controlling the experiences so as to introduce the jolts at a given point within the decision sequence. Thus, the exploration was of a quasi-experimental form.
Results The most obvious sources of shocks were those encountered when some planned decision led to an unanticipated outcome. We expected and found this to be the case for the jigsaw puzzling, the experimental context which called for the greatest number of strategic decisions. The patterns of behaviour repeatedly revealed themselves as unexpected – not just to the teams, but to the researchers. The ‘jolts’ to our own prior expectations, as sensitised by the literature, gave the pattern a unique character which we later labelled Promethean rationality. The context in which Promethean rationality was observed may be summarised as follows. Prior to some unanticipated ‘jolt’ we observed a team addressing an issue calling for a decision. The process is taken as a simulation of a strategic decision-making one. The process can not be distinguished from activities in environments that remain stable and predictable (as was found in some of the exercises). As a consequence of additional information acquired from the environment, the team’s expectations become jolted. Teams exhibiting Promethean rationality shifted to a mode incorporating rationality and rationalitydirected experimentation. We expected, and found, that some teams persist in their old behaviours. Under some conditions, this may lead to success. For example, a kind of haphazard experimentation occasionally worked, although success rate is not high in the absence of rationality. The teams that were ‘jolted’ and changed their decision behaviours displayed a subtle combination of experimentation in the service
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of rationality. This differs from ‘blind search’ (cybernetic mode); and from comprehensive search (rationalistic mode). It combines each mode inextricably. It is the inextricable combination of comprehensive search and experimentation that we call the Promethean mode. Once the pattern had been identified, it made sense of similar behaviours that had been observed, but not accurately noted in many earlier examples using the abnormal jigsaws in training exercises. We can illustrate this by reference to the jigsaw puzzling. Our observation of groups revealed that a high proportion of groups did not ‘solve’ the problem in a simple rationalistic fashion. That is to say, it was rare that a group articulated a strategy (‘let’s start from the corners and fill in the inside latter’) and accomplished that strategy. This is the essence of the widely-known insight puzzles in cognitive experiments (see, for example, Kaufman, 1988). Thus, most groups have expectations ‘jolted’. Our observations revealed that successful groups progressed through a mix of experimentation and logic. Furthermore, groups anchored to a ‘pure’ trial and error strategy, or a ‘pure’ attempt to attack the problem through rational data collection and analysis were generally doomed to failure. The patterns observed can be summarised as follows. Many teams encountered a jolt to their expectations. When this happens, some teams persevere (denial?) in their favoured mode, trying to ‘get their strategy to work’. The perseverance is maintained long after it should have become apparent that no progress is likely to be made. This applies alike to perseverance in rational mode, or in experimental mode. In contrast, some teams, on having expectations ‘jolted’ combine a strategy of rationality with a strategy of trying out new things. These are the teams that consequently achieve success. They have followed the effective promethean strategy. The promethean mode when adopted was consistently associated with rapid completion of the task according to the intended strategy. The ‘pure trial and error’ strategy was, in contrast, usually unsuccessful, although a small proportion of teams following it stumbled on the required configuration of jigsaw pieces. Groups locked-in to a purely rational mode were also largely unsuccessful, as their rationality mindset acted as an easily observed constraint that prevented them from connecting any pieces in a way that went contrary to logic. (‘That can’t fit there – it would leave a gap’). Infrequently such groups succeeded, although success seemed to be a result of a departure from rationality, for
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example by a team member becoming disillusioned with logic and challenging the taken-for-granted. The least successful groups all seemed to suffer from ‘business as usual’, that is to say, there was no observed awareness in the team’s actions that any expectations had been disturbed. No jolts, and no shifts of strategy, and business as usual.
Jolts and strategies in the other pilot studies The jigsaw puzzling gave us the earliest indications of the behaviours that we were to label Promethean strategy making. The other studies were rich in examples of teams devising strategies. However, the opportunities for observing jolts were far less guaranteed. Unexpected jolts were not always arranged for the convenience of the researchers! Nevertheless, the other studies allowed us to obtain behavioural data in a single, surprise-free decision context. Such data, though not as exciting as behavioural data obtained on occasions where groups were jolted, contributed to the completeness of our total data set. With these data we were able to ascertain that our experimental trials were comprehensive enough for us to propose our major findings. Further, in these surprise-free contexts, we saw behavioural modes which conformed to the principles of bounded rationality as presented in earlier decision literature (e.g., Simon, 1979, March and Simon, 1958). Still some teams, for example, operated with a combination of rationalistic and expert decision components. We labelled this mode the Confucian mode. This mode arose in conditions in which jolts did not occur. It also turned out to be effective under such circumstances. A typical example would be the client-based creative development, with the Part-Time MBA programme. In this project, the group’s wide search was directed by an expert figure (the client) and the search results were intuitively selected by that figure. These various contingencies1 await a more thorough investigation under conditions
more deliberately chosen for their examination. They serve as an indication that there remains much to be explored, into the nature of strategic decision processes, even in relatively non-turbulent environments.
The longitudinal studies A self-report inventory was developed to collect participant views, a perspective lacking from the pilot study. The inventory, using a seven-point Likert scale, tapped views on the three decision modes of rationality, expertness and cyberneticness. The assessments of the contributions from the three modes of decision-making across the thirteen decision-groups are shown in Figure 1. The patterns of contributions from rationalistic, expert, and cybernetic modes are shown in Figure 1 for all thirteen groups. The rationality and cyberneticness modes are interconnected, and relatively highly coded. The ratings of the expert mode appear to have a lower coding for the four Simulex groups (groups 1 to 4) in which a jolt occurred. Under the lower-turbulent conditions, there is a shift of pattern. The expertness ratings rise, (group 9 is an exception, for which some explanation is needed). There is a less prominent, yet detectable dip in the rationality and cyberneticness ratings under non-turbulent conditions. Group 9 demonstrates a pattern of behaviour that was associated with a group disenchanted with its own performance. Supportive evidence confirms its somewhat anomalous behaviours and attitudes. It has been retained for complete accuracy in reporting the findings of the study. If ignored, the patterns described are even more strongly evident. Because of the potential importance of the impact of environmental jolts, a further analysis was conducted into the patterns of decision found in these conditions. The ratings of the three modes were split into (a) the average ratings prior to the period when the team
Figure 1. Three Decision-Making Modes across the Thirteen Decision-groups
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became aware of the unanticipated outcomes: (b) the ratings immediately before the jolt; (c) the ratings immediately afterwards; and (d) the average ratings after the jolt. Four groups (groups 1 to 4 in Figure 1) were identified to have experienced environmental jolts during the decision tasks. One representation of these ratings is shown in Figure 2. Of the four groups experiencing major jolts, all four reported a significant shift towards higher rationality immediately after the ‘jolt’. The same four groups also reported retained levels of experimentation – thus the rationality gain had not replaced experimentation. Indeed, two of the four teams showed significant gains in reported experimentation as well as the reported rationality gains. As shown in Figure 2, the group had a jolt between periods 4 and 5. The group’s levels of rationality and cyberneticness increased dramatically in the face of jolts, and more or less maintained high levels relative to expertness afterwards. Preliminary investigations of real life strategic decision patterns have begun in Asian and European contexts. We have a case2 of technology transfer regarding transferring from abroad methods of composing and producing a special chemical to help advance the level of technology in producing silicon wafers in Taiwan. The case happened in the second half of 1990s. Taiwan has long been seeking vigorously to develop its semiconductor industry. Its ambition can be manifested by serial attempts of ITRI (Industrial Technology Research Institute), a non-profit R&D organisation established by the Ministry of Economic Affairs in 1973 in Taiwan, in transferring and developing the latest technology aiming to upgrade the semiconductor industry in Taiwan. The case mentioned here was part of the ITRI attempts. A special task force was formed to carry out this project of technology transfer. The task force searched widely differing possible sources of technology, mainly global companies such as IBM, Hoescht and Fujitsu.
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International-famous business consulting companies were turned to for information gathering and analysis. The search was comprehensive (The task force being highly rationalistic). The task force obtained the information on differing product lines of these companies related to that special chemical, reported the technology levels of these companies on those product lines, and the special features of those products. It even visited these differing possible sources of technology, mainly located in Japan, to obtain data on factory and laboratory layout, and enquired the willingness of these companies in joint development of the technology needed by ITRI. This task force succeeded in finding the Japanese branch of a German multinational for cooperation in developing that special chemical of a new generation. That Japanese branch was confronted with obstacles in technological development and thought to seek assistance from Taiwan’s ITRI for its rich manpower, R&D resources and access to industries in Taiwan. The two parties started to work on plans on joint development of the new-generation product, and subsequent marketing activities once the product has come to a stage of commercialization. After the planning, the two tried to propose to the other party and negotiated (Namely, the task force adopted rational-directed experimentation). However, the two parties could not agree on the issue of marketing ownership. That Japanese branch insisted on its directing the marketing and selling the product in Taiwan since Taiwan will be a munificent portion of its global market. The ITRI task force could not agree as its mission was to bring in the technology for long-term development. The negotiation broke up. In the face of that setback (environmental jolt), the task force started to wonder where to find a new technology source. It used its information channels to probe other opportunities (rational-directed experimentation). The probe led to identifying another German multinational which
Figure 2. Changes of the Three Decision Modes of One Representative Group Which Faced a Jolt in Their Decision Periods
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intended to sell out its technology in that special chemical. Further information collection and contact with that company confirmed that the technology to be sold matched the need of Taiwan (The task force being rationalistic). The task force and the German company went into a deal and Taiwan successfully acquired a new technology, which now has developed into a stage of commercialisation. From the case above, the decision making processes of the task force have been characterized by a combination of being rationalistic and cybernetic (Promethean rationality). Even in the face of jolt, that behavioural model persisted. Although, in such qualitative expressions, the rise or fall of rationality and cyberneticness could not be detected, we seem to have findings which might add value to our experimental trials reported here. First, rational search may help a task force get things on the right track in the first place, and help it better cope with the jolt once happening. Second, simple cybernetic trials may substitute rational search in a delicate situation in which efforts to be rational may cause pressure from the environment. As can be seen in this case, the task force had experienced a setback. In order to carry out its mission, it would turn to other possible sources of technology for help. However, if the first German multinational decided to blockade Taiwan from acquiring a new technology so that it can maintain its technology leadership, the result for Taiwan may turned otherwise. The task force had to keep low profile in seeking the other partner and struck a deal as soon as possible.
Discussion Promethean rationality under turbulent conditions is a previously unreported hybrid mode of strategic decision-making. Both nonparticipant observation and self-reports of participants in strategic decision-making provide the emerging picture of Promethean rationality. We had also a real-life case which provides evidence for this decision mode. In the ancient myth, Prometheus set off to steal a great secret and secure it for human kind (Graves, 1955). In Promethean rationality the decision-makers’ quest is to ‘steal back’ order out of disorder by direct action. Rationality has been lost in the turbulence; it is to be recovered in heroic action. Yet the quest is not irrational. It occurs within a rationalistic framework that offers direction – even if that imperative is of the ‘away from’ rather than the ‘targetted at’ kind.
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Human information processing may be limited through capacity or opportunity. With our new lenses, we discovered that Promethean rationality seeks to compensate for both potential weaknesses. The bulk of this work reported the findings from a range of experimental studies. It is now a commonplace to accept that ‘the map is not the territory’. We are well aware of our research limitations and accept that the laboratory experiment is not the same as strategy implemented in action. However, we feel the range of trials adds strength to our conclusions. Furthermore, the sampled teams included a significant proportion of executives who engaged in strategic activities in their working lives. One particular merit of the experimental approach is that we have succeeded in collapsing the intervening variables between strategic formulation and implementation (cf. Dean and Sharfman, 1996). This makes the modelling of strategic effectiveness less unsafe than when the conditions are more realistic. Nevertheless, we recognise the shortcomings, and need for practical trials are required to check the broad claims made of Promethean rationality under turbulent conditions (cf. Rajagopalan, Rasheed, and Datta, 1993). How might the mode have escaped detection in such a field of intense research activity? There are several possibilities. The mode could be an artefact of our experimentation and interpretation. This seems unlikely. The expectations of the pilot study were more than confirmed in the longitudinal studies. The mode was found in a range of conditions including non-turbulent environments. If we assume Promethean rationality to have phenomenological status, we need some other explanation for its concealment from prior investigative view. Our own studies give a possible clue. The wide-ranging pilot studies still concealed evidence of Promethean rationality except where there was the possibility of multiple decisions. Most early studies are of a kind that did not permit multiple decisions, and adaptive responses to jolts, to reveal their consequences (e.g., Glick et al., 1993; Hart and Banbury, 1994; Priem et al., 1995). Additionally, the focus of debate directed attention away from the possibility of hybrid modes. In short, the experimental conditions studied, and expectations of researchers, have militated against the discovery of the significance of hybrid modes. As so often happens, the polarities may become resolved through an integrative move. The hybrid modes identified in this work must be regarded as supportive of both rationality and departures from rationality
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within effective decision making behaviours. We feel it is important to stress that the results are broadly in favour of rationality, as has been revealed in earlier studies (e.g., Bourgeois and Eisenhardt, 1988; Glick et al., 1993; Hart and Banbury, 1994; Jones et al., 1992; Khatri, 1994; Priem et al., 1995). We suggest that the way forward is not through considerations of ‘more’ or ‘less’ rationality under turbulent conditions. Nor should it be rationality under ‘more’ or ‘less’ turbulent conditions. Rather, it is the manner in which rationality is combined with other modes – ‘both and’ rather than ‘either or’. The work of Simon (e.g., 1952, 1955) bounded the rational behaviours expected under practical conditions. That major step served to bound rationality in ways that have been unfolding for several decades. We consider our empirical work to be the kind of ‘filling in’ of the concept of bounded rationality. Our bounding addresses the conditions of turbulence, and the possibilities of hybrid modalities of decision-making.
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these will benefit if they are taken outside the controlled conditions of the psychological laboratory. As we can see from the above report of the preliminary observation of reallife cases, the rationale for adopting the Promethean mode may indeed be because of thoughtful considerations of the decision makers, not simply be because of the imposition from the jolt. Future work will thus focus on real life strategic challenges made urgent by jolts, and significance of behavioural responses, under many differing conditions and levels of analysis. For example, case analyses of financial turmoil at governmental and institutional levels are called for. Nor need we neglect the learning to be gained from studies of personal development strategies arising from perceived personal or cultural challenges. Finally, in salutary fashion we are reminded of the archetypal jolts that occur under catastrophic circumstances. In the final drafting of this paper, the author had personal experiences of earthquakes, a major train disaster, in a time in which we can at best ‘expect only the unexpected’.
Conclusions The development of effective strategic responses under turbulent conditions may involve a combination of both rational and experimental or cybernetic behaviours. This is a previously unremarked hybrid mode which we have termed Promethean rationality (Hsu and Rickards, 1998a,b). This mode has been demonstrated as existing and effective under a range of experimental conditions. The finding opens up the debate into the bounding of rationality to achieve effective strategic responses. In the past, the debate has centred around a reconciliation of results. Some suggesting benefits of enhanced rationality, others finding mixed or opposing results, as conditions become more turbulent. Nor is Promethean rationality the only effective hybrid mode of strategy making. As implied, but largely disregarded in earlier studies, a combination of rationality and expert knowledge acquisition has been found to succeed under conditions where that has been no observed disconfirmation of expectations. Taking these two findings together, we conclude that hybrid modes of strategy formation and implementation deserve closer attention in future studies. Our work indicates that hybrid modes are unlikely to reveal themselves under most cross-sectional studies of a single strategyformulating episode. Rather, we suggest that longitudinal studies are required, although
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Notes 1. With the discovery of Promethean and Confucian rationality, we do have evidence of hybrid modes not all implied in the work of Lord and Maher. 2. Due to data secrecy agreement, details, e.g., the name of the product and the personnel composition in the task force in ITRI, are eliminated and specific time frame not designated.
References Bourgeois, L. J., III, & Eisenhardt, K. M. (1988) Strategic decision processes in high velocity environments: Four cases in the microcomputer industry. Management Science, 34(7), 816–835. Brown, S. L., & Eisenhardt, K. M. (1997) The art of continuous change: Linking complexity theory and time-paced evolution in relentlessly shifting organisations. Administrative Science Quarterly, 42, 1–34. Cyert, R. M., & March, J. G. (1992) A behavioral theory of the firm, 2nd Ed. Cambridge, MA: Blackwell. Dean, J. W., Jr., & Sharfman, M. P. (1993) The relationship between procedural rationality and political behavior in strategic decision making. Decision Science, 24(6), 1061–1083. Dean, J. W., Jr., and Sharfman, M. P. (1996) Does decision process matter? A study of strategic decision-making effectiveness. Academy of Management Journal, 39(2), 368–396. Eisenhardt, K. M. (1989a) Making fast strategic decisions in high-velocity environments. Academy of Management Journal, 32(3), 543–576.
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Eisenhardt, K.M. (1989b) Building theories from case study research. Academy of management review, 14(4), 532–550. Fredrickson, J. W. (1983) Strategic process research: Questions and recommendations. Academy of Management Review, 8(4), 565–575. Fredrickson, J. W., & Mitchell, T. R. (1984) Strategic decision processes: Comprehensiveness and performance in an industry with an unstable environment. Academy of Management Journal, 27(2), 399–423. Fredrickson, J. W. (1984) The comprehensiveness of strategic decision processes: Extension, observations, future directions. Academy of Management Journal, 27(2), 445–466. Glaser, B.G., & Strauss, A.L. (1970) The discovery of grounded theory. Strategies for qualitative research, Chicago: Aldine Glick, W. H., Miller, C. C., & Huber, G. P. (1993) The impact of upper-echelon diversity on organizational performance. In G. P. Huber & W. H. Glick (Eds.), Organizational change and redesign: Ideas and insights for improving performance, 176– 214. New York: Oxford University Press. Graves, R. (1955) The Greek Myths:1. London: Penguin Books. Hart, S. (1992) An integrative framework for strategy-making processes. Academy of Management Review, 17(2), 327–351. Hart, S., & Banbury, C. (1994) How strategymaking processes can make a difference. Strategic Management Journal, 15, 251–269. Hsu, F. B., and Rickards, T. (1998a) Strategic decision processes and effectiveness: An empirical examination by Lord and Maher’s integrative framework under discontinuous environmental conditions. Paper for APROS (Asian-Pacific Researchers in Organisation Studies) Colloquium, July 14–16, 1998. Shanghai, China: Jiaotong University, China Europe International Business School. Hsu, F. B., and Rickards, T. (1998b) Promethean rationality: Evidence for a previously undetected mode of effective strategic decision-making under turbulent environmental conditions, developed from Lord and Maher’s four component models. Paper for ICM’98 (International Conference of Management), July, 1998. Shanghai, China: Jiaotong University, Management School. Huber, G. P., & Daft, R. L. (1987) The information environments of organizations. In F. M. Jablin, L. L. Putnam, K. H. Roberts & L. W. Porter (Eds.), Handbook of organizational communication: An interdisciplinary perspective, 130–164. London: Sage. Jones, R. E., Jacobs, L. W., & van’t Spijker, W. (1992) Strategic decision processes in international firms. Management International Review, 32, 219–236. Judge, W. Q., & Miller, A. (1991) Antecedents and outcomes of decision speed in different environmental contexts. Academy of Management Journal, 34(2), 449–463. Kanter, R. M. (1983) The change masters: Corporate entrepreneurs at work. London: George Allen & Unwin. Kaufman, G. (1988) Problem-solving and creativity. In K. Gro¨nhaug, & G. Kaufmann, Innovation: A cross-disciplinary perspective, Oslo: Norwegian University Press, 87–137
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Khatri, N. (1994) Strategic decision processes and organizational performance. Doctoral Dissertation. State University of New York at Buffalo, The School of Management, Buffalo, New York 14260. Kleinmuntz, D. N., & Thomas, J. B. (1987) The value of action and inference in dynamic decision making. Organizational Behavior and Human Decision Processes, 39(3), 341–364. Lord, R. G., & Maher, K. J. (1990) Alternative information-processing models and their implications for theory, research and practice. Academy of Management Review, 15(1), 9–28. Lord, R. G., & Maher, K. J. (1993) Leadership and information processing: Linking perceptions and performance. London: Routledge. McConkey, D. D. (1988) Planning in a changing environment. Business Horizons, 31(5), 64–72. March, J. G., & Simon, H. A. (1958) Organizations. New York: Wiley. Miles, M.B., & Huberman, A.M., (1994) Qualitative data analysis: An expanded sourcebook, 2nd ed. Thousand Oaks, Ca: Sage Miller, D., & Friesen, P. H. (1983) Strategy making and environment: The third link. Strategic Management Journal, 4, 221–235. Papadakis, V. M., Lioukas, S., & Chambers, D. (1998) Strategic decision-making processes: The role of management and context. Strategic Management Journal, 19, 115–147. Priem, R. L., Rasheed, A. M. A., & Kotulic, A. G. (1995) Rationality in strategic decision processes, environmental dynamism and firm performance. Journal of Management, 21(5), 913–929. Rajagopalan, N., Rasheed, A. M. A., & Datta, D. K. (1993) Strategic decision process: Critical review and future directions. Journal of Management, 19, 349–384. Simon, H. A. (1952) Comments on the theory of organizations. American Political Science Review, 46(4), 1130–1139. Simon, H. A. (1955) A behavioral model of rational choice. Quarterly Journal of Economics, 69, 99–118. Simon, H. A. (1957) Administrative Behavior, (2nd ed.). New York: Macmillan. Simon, H. A. (1960) The new science of management decision. New York: Harper and Row. Simon, H. A. (1965) The shape of automation: For men and management. New York: Harper and Row. Simon, H. A. (1979) Rational decision making in business organizations. American Economic Review, 69(4), 493–513. Simon, H. A. (1986) Rationality in psychology and economics. Journal of Business, 59(4), S209–S224. Tushman, M. L., & Romanelli, E. (1985) Organizational revolution: A metamorphosis model of convergence and reorientation. In L. L. Cummings & B. M. Staw (Eds.), Research in organizational behavior, Vol. 7: 171–222. Greenwich, Conn.: JAI Press.
Frederick Hsu is a Lecturer at the Department of Business Administration, Chang Gung University, Taiwan, R. O. C.
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Are We Ready to Innovate? Work Climate-Readiness to Innovate Relationship: The Case of Jordan Abubakr Mohyeldin Tahir Suliman This paper aims at understanding the role of work climate in influencing employees’ innovation. The study consists of two core concepts: work climate and readiness to innovate. By surveying a sample of 1000 employees from 20 industrial companies in Jordan, it investigates the impact of work climate on employees’ readiness to innovate. The results reveal that employees’ perceptions of their work climate tend to play a significant role in their readiness to innovate, with implications for both practitioners and researchers. An interesting finding is that older employees showed higher climate satisfaction reports than did younger employees, and were found to be more innovative. In addition, male employees reported higher levels of readiness to innovate – as rated by themselves – than did their females counterparts. Key Words: Work climate, innovation Jordan, and Arab
Introduction
S
ince the early 1960s, researchers (e.g., Forehand & Gilmer, 1964; Pritchard & Karasick, 1973; Schneider & Reichers, 1983; Suliman, in press) have been trying to determine how organisational context affects the behaviour and work outcomes of employees. Since the organisational context is subject to continuous change, there is a need to update our understanding and knowledge in this field on a regular basis. For example, the factors that were found to be significant in influencing work outcomes in the 1960s and 1970s may not be of value in today’s diverse work teams and environments. Unfortunately, most Middle Eastern managers are trying to manage their organisations based on various Western ideas and concepts; which mainly originated in the 1960s and 1970s. For example, it is still presumed that workers have inherent dislike of work, so that they should be threatened and forced to produce. Further, they prefer to avoid responsibility. These imported Western ideas and concepts of management appear to have played only a marginal role in improving the performance of Middle Eastern organisations. This may well be because they have been # Blackwell Publishers Ltd 2001. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.
applied in package forms, rather than being adapted to the local environments and cultures. In this context, Hofstede asserted: If one thing has become clear, it is that the export of Western-mostly Americanmanagement practices and theories to poor countries has contributed little to nothing to their development. . . . If nothing else, the general lack of success in economic development of other countries should be sufficient argument to doubt the validity of Western management theories in non-western environments . . . It has become painfully clear that development cannot be pressure-cooked; it presumes a cultural infrastructure that takes time to grow. Local management is part of this infrastructure; it cannot be imported in package form. Assuming that with so-called modern management techniques and theories outsiders can develop a country has proven a deplorable arrogance. At best, one can hope for a dialogue between equals with the locals, in which the Western partner acts as the expert in Western technology and the local partner as the expert in local culture, habits, and feelings’ (Hofstede, 19934: 86–87). Today’s global market puts more pressure on Arab organisations to develop their performance in order to survive and compete. In
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such global competition, the blind application of Western concepts or even the rational adaptation of these ideas is no longer enough to remain a member of the international market. Organisations, including Arab organisations, should strive to be and remain distinguished from other organisations in the marketplace. Originating new and valuable ideas and applying them are inevitable issues in work organisations. Since creativity and innovation cannot be imported in package forms, Arab organisations need to learn how to create and innovate new ideas and concepts based on their own cultural and business experiences. Thus, building a conducive work climate that facilitates, encourages and supports creativity and innovation is critical to the vitality of organisation. Therefore, the current study attempts to examine the role of work climate in influencing employees’ readiness to innovate.
The importance of the study This study could be beneficial for both managers and researchers. From a practical perspective, the study will help managers, especially in the Arab World, to manage innovation more effectively by providing them with the most important factors of work climate that influence employees’ readiness to innovate. The study also highlights the gap, if any, between employees’ perceptions of their readiness to innovate and their immediate supervisors’ views about their innovation levels. Secondly, from an academic perspective this study explores for the first time in the Middle East the role of work climate in affecting employees’ readiness to innovate. It will also shed a light on the impact of demographic variables on employees’ perceptions of work climate and innovation. As there are few Western studies that have addressed the work climate-readiness to innovate relationship, the current study will also contribute through making possible cross-cultural comparisons between the findings of this study and those of other Western studies.
Literature summary The concept of work climate started to permeate the management literature and influence scholarly thinking as recently as the 1960s. It arose and developed as a result of the contribution of individual behaviour theories, management theories, and work theories (Litwin & Stringer, 1968). Thus, after
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concretising of the climate concept in management theories in the 1960s, scholars from the 1970s onwards started to link the construct of work climate to the other organisational concepts, e.g., individual differences (Schneider & Bartlett, 1970); structure (Payne & Pugh, 1976); and communication (Poole & McPhee, 1983). In all these studies, work climate had different names but carried similar or identical meanings. Hence, such terms as organisational climate, work environment, internal environment, work situation, are commonly used in the management literature, and appear to refer largely to the concept of work climate. In this study we will use the terms work climate and climate to refer to the perceived work environment. The concept of climate in the management literature has been defined in different ways by different writers. Forehand & Gilmer define it as: ‘the set of characteristics that describe one organisation and that, (a) distinguish the organisation from other organisations; (b) are relatively enduring over time; and (c) influence the behaviour of people in the organisation’ (Forehand & Gilmer, 1964: 362). Silva (1992) defined it as all that constitutes the human environment of an organisation. However, all work climate theories and definitions can be grouped in four general categories: (a) The structural approach: This approach exclusively regards work climate as a characteristic or an attribute belonging to an organisation (e.g., Forehand & Gilmer, 1964; Payne & Pugh, 1976). (b) The perceptual approach: this view places the basis for assessing and defining work climate within the individual (e.g., Schneider, 1975; Schneider & Riechers, 1983). (c) The interactive approach: This perspective places the basis of defining the climate, on the interaction between both the individual and the organisation (e.g., Silva, 1992). (d) The cultural approach: This approach incorporates the interaction of group members as a key determinant of climate, where this interaction is influenced by organisation culture (Moran & Volkwein, 1992). On the other hand, there is no doubt that some of the essential ingredients of survival in today’s global market are productivity, quality, creativity, and innovation. Some researchers argue that organisations which aim at surviving and competing in today’s global market should innovate. Thus, such expressions as ‘innovate or die?’, ‘innovate or
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evaporate?’, ‘innovate or vegetate’ and ‘innovate or litigate’ which are commonly used in the recent management literature indicate the necessity for innovation as a concept with practical application and utility. According to Thompson & Werner, ‘in most organisations, it is no longer sufficient for an employee simply to carry out his or her essential job functions. Employees today are expected to take initiative and engage in those behaviours; which insure that the organisation’s goals are realised. Moreover, the rapid pace of change in many industries today has made the ‘‘job description’’ per se somewhat obsolete. As a result of these and other changes, managers are recognising the value of creating a work environment that fosters discretionary behaviours such as organisational citizenship behaviour’ (Thompson & Werner, (1997: 586). Some researchers (e.g., Katz & Kahn, 1978 and Matheiu & Zajac, 1990) argue that ‘extra role’ behaviours, such as creativeness and/or innovativeness, often keep an organisation competitive. This reflects a wide consensus among Western researchers that innovation is vital for the continuous and progressive wellbeing of individuals and societies in general. On the other hand, the issue of innovation is somewhat disregarded in the Middle Eastern literature. More specifically, in the Arab context innovation and risk taking are activities; which seem to be more often punished than rewarded (Al-Faleh, 1989; Mouna, 1980; Suliman & Iles, 1999). However, this general description of innovation status in Arabic organisations is now changing. Since they cannot remain out of the globalisation game, organisations in Arab countries have started to realise the importance of innovation in the global market. As far as Jordan is concerned, our literature survey showed that there are few studies in this field, such as Abu-Faris (1990), Awamleh, 1994, Al-Dahhan (1989) and Suliman & Iles, 1999. Awamleh, for example, examined managerial innovation in the Jordanian civil service sector. He found that the most significant obstacles to innovation are those related to work climate rather than those related to the societal environment or managers themselves. The researcher argued that ‘since evidence has proved that the most significant obstacles to innovation are those related to organisational climate, it is essential to undertake positive changes in the civil service climate, which may create an appropriate atmosphere for innovation’ (Awamleh, 1994: 59). According to the literature survey, to the best of the researcher’s knowledge, no study
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in the Arab world or in the West has empirically examined the effect of work climate on employees’ readiness to innovate.
Method Study Sample One thousand employees from the top, middle and bottom management working for 20 Jordanian industries (registered in Amman Financial Market) were co-opted in this study. The following equation was used in distributing the study questionnaires among the randomly selected subjects: __ n __* 1000 X=X
N Where: X = total number of questionnaires per company Xn = total number of employees in the company 1000 = total number of questionnaires N = total number of employees in the 20 companies (26,600 employees).
Operational Definitions The study variables can be operationally defined as follows: Work Climate: Based on previous definitions (e.g., Forehand & Gilmer, 1964; George & Pishop, 1971; Pritchard & Karasick, 1973; Moran & Volkwein, 1992), and considering the ideas of interactional approach, the term work environment can be operationally defined in this study as: relatively enduring characteristics of an organisation’s internal environment that differ from any other organisation, and is: (1) produced by the interaction of individuals and the organisation; (2) perceived by organisational members according to their demographic and career backgrounds (e.g., sex, marital status, tenure and job level); (3) includes members’ collective perceptions about their organisation with regard to such dimension as supervisory style, employee competence and co-worker relations; (4) serves as a bases for interpreting the situation; and (5) influences the individuals’ behaviour and work outcomes.
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Readiness to Innovate: The degree to which employees are creative, innovative and ready to question the old established habits of doing work.
Measurement of Variables The study variables are measured using Likert 5-point scales as follows: Work Climate: Fifty-eight item scale adapted from Newman’s (1974) scale of Perceived Work Environment (PWE) is used to measure the concept of work climate. Readiness to innovate: This variable is measured using a six-item scale developed by the researcher. The same scale is meant to be answered by the employee and his/her immediate supervisor (self rating and manager rating).
The Questionnaire The study questionnaire was translated into Arabic with great attention to the meanings and ideas embodied in the items (the original scale is in the English language). The Arabic translation of the questionnaire was then translated back into English by an expert in the Arabic and English languages. After comparing the latter English version of the questionnaire with the original, the researcher was satisfied with the accuracy and quality of the translated version.
Findings and discussion Sample Description
HO: There will be no difference between the employee and his/her immediate supervisor in rating employee readiness to innovate.
Out of the 1000 questionnaires distributed to study subjects at the three managerial levels, 783 were returned to the researcher. Table 1 describes the study sample, using seven biographical variables. As can be seen from Table (1), the total number of male employees co-opted in the study was 627 (80.1%), and the total number of female employees was 156 (19.9%). The majority (502) of study subjects were married employees, representing 64.1%. The number of non-married employees was 281 (35.9%). Moreover, Table (1) shows that 193 employees were of high school level or less, whereas intermediate diploma holders consisted of 232 employees. The majority (352) of respondents were first degree holders and above. Three age levels were reported. The majority (387) of respondents were 35 years or less, 263; were between 36 and 46 years of age, and 133 employees were 47 years and above. Frequencies of organisational tenure (O. tenure) show that the majority (428) of respondents had been with their organisations for 7 years or less. It is clear from Table (1) that the majority (363) of co-opted employees had been in their jobs for 7 years or less. The distribution of study subjects, according to their job level, revealed that the majority (463) of surveyed subjects were at middle management level.
Statistical Analysis
Reliability of Scales
The data of this study are analysed using the Statistical Package for Social Sciences (SPSS-X) program. The following statistical measures are used: descriptive statistics (frequency, mean and standard deviation) and
The reliability of the questionnaire was examined using the reliability test. As can be seen from Table (2), the Cronbach’s alpha for the overall study instrument was found to be 0.83, work climate 0.96, self-rated innovation
Study Hypotheses I follow the convention of generating hypotheses stated to indicate the expectations derived from theoretical considerations indicated above. Using the ‘HO’ definition the study hypotheses can be stated as follows: (a) The First General Hypothesis: HO: Employees’ demographic backgrounds (age, sex, education, marital status, job level, job tenure, and organisational tenure) will influence their perceptions of work climate. (b) The Second General Hypothesis: HO: Employees’ demographic backgrounds (age, sex, education, marital status, job level, job tenure, and organisational tenure) will influence their readiness to innovate. (c) The Third General Hypothesis: HO: There is a positive relationship between work climate and employee readiness to innovate. (d) The Fourth Hypothesis:
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inferential statistics (reliability, means, t-test and correlation test).
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Table 1. The description of the study sample. Gender
Male Female Married Non-married High school or less Diploma First degree and above 35 years or less 36–46 years 47 years and above 7 years or less 8–13 years 14 years and above 7 years or less 8–13 years 14 years and above Top level. Middle level Bottom level. Total
Marital status
Education
Age
O. Tenure
Job Tenure
Job level
627 156 502 281 192 232 359 387 263 133 428 172 183 363 191 229
783
783
783
0.68 and manager-rated innovation 0.87. The reliability values are better than the 0.6 level of minimal acceptability.
Demographic Variables As can be seen from Table (3), employees’ gender is positively and significantly related to self-rated innovation, indicating that male employees tend to rate their readiness to innovate more positively than female employees. As is the case in all Arab countries, Jordanian society is male oriented. We may speculate that male members in work organisation (in most cases) are given more opportunities for risk taking (chances of trial and error experimentation) than are female members. The society and the organisation are not yet
783
783
783
099 463 221 783
prepared to accept females’ faults in the manner in which errors of males are accepted. Therefore, female employees in most Arab countries, including Jordan, have less opportunities to try out and test new ideas of doing things, and this negatively influences their readiness to innovate. In this context, Suliman (2000) studied work enthusiasm in the Arab World, he found that male employees tend to show higher levels of enthusiasm than female employees. Suliman suggested that the female employee tends to show lower enthusiasm ‘. . . because in most cases she has to divide her enthusiasm between her family and work’ (p. 289). Accordingly, it might be argued that the levels of females’ work enthusiasm in the Arab World has a negative impact on their readiness to innovate.
Table 2. Results of reliability test.
Cronbach’s alpha
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Study instrument
Work climate
Self-rated innovation
Immediate supervisor rated innovation
0.83
0.96
0.68
0.87
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Gender and self-performance
Furthermore, women in Arabic society are expected to stay at home, and are discourage from getting employed. Those minorities who join the workforce for one reason or another suffer from discrimination. For example, working women suffer from low wages compared to those given to their males’ counterparts for doing the same tasks (the Star Newspaper, 8 August 1998). A Jordanian female planning engineering expressed her feelings as: ‘‘THEY LIKE me, but only under one condition: to stay a pussycat, they even advise me not to argue, just to listen and keep my professional views away from the office, since they claim to understand better than I do’’ (the Star Newspaper, 13/08/1998, p. 2). Thus, this could also be a reason for females’ tendency to report less levels of readiness to innovate compared to male employees. In addition, female employees in the Arab World tend to respect the cultural norms that describe the good woman as the one who is humble, simple, modest and always wanting to be under the shadow of a man. Generally, males in the Arabic context believe that they are better than females; not only in innovation, but also in all other aspects of work life. Most Arabic females tend to accept and in most cases support this belief. Similar results were also reported in the management literature. Baruch (1996) reported a significant relationship between gender and self-performance ratings. Male employees tended to rate their performance more positively than females. Likewise, Makiney & Levy (1998) and Slocombe & Dougherty (1998) found that males’ self rated performance was higher than females. However, the relationship between these two constructs was not significant. To conclude, the inclination of male employees in Jordan and the Arab World to
report higher readiness to innovate than female employees could be attributed to cultural factors rather than aptitude and ability factors. This argument could be supported by considering the result of gender relationship with readiness to innovate, as rated by immediate supervisors. As can be seen from Table (3), this relationship is not only weak (r = .04) but it is also non-significant. This indicates that managers in Jordanian industrial firms exhibited no tangible (significant) differences between males and females in readiness to innovate. Table (3) also shows that employees’ educational level is significantly and positively related to readiness to innovate, as rated by immediate supervisors. The readiness to innovate of well educated employees was more positively rated by their immediate supervisors than less educated employees. Since well educated employees, in general, are in more senior managerial positions they are more likely to show positive views about innovation. Moreover, well educated employees are more motivated to be innovative, because they are more likely to be satisfied with their organisational rewards than less educated employees. As can be seen from Table (3) employees’ age is significantly and positively related to work climate and readiness to innovate, as rated by both employees and immediate supervisors. Older employees showed more positive perceptions of work climate than younger employees. Generally, older employees tend to like the environment that they get used to and dislike changing it even if it is not satisfying them because it is familiar to them. On the contrary, younger employees, generally, dislike routine and are more likely to look to change it. Therefore,
Table 3. The relationship between demographic variables and work climate, self and supervisor rated innovation.
Gender Marital status Educational level Age Organisational tenure Job tenure Job level
Work climate
Self-rated innovation
Immediate supervisor rated innovation
.02 .04 .02 .41** .21* .44** .58**
.20* .06 .03 .22* .40** .55** .21*
.04 .01 .24* .23* .30* .50** .42**
Note: * significant at .05 and ** significant at .001. Volume 10
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work organisations need to ensure a better balance in terms of age of their employees. Moreover, older employees showed higher levels of readiness to innovate, as rated by themselves and by their immediate supervisors, than younger employees. Two reasons can be suggested for these findings. The first possibility is that older individuals represent one of the major sources of wisdom and guidance to younger individuals in most Arab countries, including Jordan. Therefore, older employees view themselves as better than younger employees, and tend to rate themselves more positively. Secondly, younger employees in the Jordanian context are more educated than older employees, and tend to like administrative work rather than technical work. Since the opportunities for innovation in technical work- normally carried by older employees- are wider than that of the administrative work; older employees tend to show higher levels of readiness to innovate than younger employees. In this context, Barnard argued that technical workers are important assets for work organisations, and that their presence encourages innovation processes in the workplace, which is necessary for survival and competition. She asserted: The skills of technical people are an important resource to a firm in meeting strategic objectives. This makes attracting technical talent a high priority item on corporate agendas, and it opens an attractive market for qualified professionals. When there is a high demand for technical services, the same forces drive the creation of new businesses to satisfy demand. Further, when workplace factors leading to dissatisfaction are coupled with promising external opportunities, it is not surprising that indemand technical professionals leave employers to join a competitor or found a competing firm. They are pushed into termination by negative situations and, at the same time, pulled by external opportunities’ (Barnard (1997: 14). Because of the pressures of cultural norms that stress the respect of older people, younger employees (as managers) tend to rate older employees’ readiness to innovate more positively than younger employees. To the best of the researcher’s knowledge, no study has investigated the relationship between age and readiness to innovate. However, it may worth mentioning the results of some other studies in this field. Baruch (1996), and Liden, Stilwell, & Ferris (1996), for example, found no relationship between age and performance. Ferris (1981) found that junior level employees’ age and performance are negatively related, while senior level employees’ age is positively related to performance.
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[It may worth mentioning that the debate over the influence of socio-cultural factors on work organisations, especially in the Arab world, is far from over, and that it falls beyond the scope of this study]. Table (3) shows that organisational tenure and job tenure are significantly and positively related to work climate and readiness to innovate, as rated by employees and their immediate supervisors. Longer tenure employees showed more positive perceptions of work climate and higher levels of readiness to innovate. Since tenure is related to age, the above mentioned reasons can also apply for these findings. Job level, given as top, middle and bottom management, showed positive and significant relationship with work climate and readiness to innovate, as rated by employees and their immediate supervisors. Higher level employees showed more positive perceptions of work climate and higher levels of readiness to innovate. Since higher level employees are generally more satisfied with their organisational rewards, they tend to show more positive perceptions of work climate and higher readiness to innovate compared with lower level employees. Based on the above findings and discussion it can be concluded that the first and second hypotheses are partially supported.
Organisational and job tenure
Work Climate and Readiness to Innovate Table (4) presents the results of the relationships of work climate and its dimensions with readiness to innovate (self and immediate supervisor rating). As can be seen from this table, employee-immediate supervisor relationships, one of the climate factors, has significant relationship with both self and supervisor rated readiness to innovate. Although both correlations are positive, the magnitude of correlation for self rated innovation (.16) is smaller than that of immediate supervisor rated innovation (.46). The satisfaction with the immediate supervisors can build trust and commitment in the workplace because employees will feel helped by their immediate supervisor and valued within the organisation. Thus, the more positive the relationship of employees with their immediate supervisors the higher the levels of their readiness to innovate, and vice versa. Likewise, distributive justice, psychological contract, innovation climate, co-workers relations, supervisory style, performance-reward relationship, decision making policy, employee competence, task characteristics, fairness and employee motivation are significantly and
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Table 4. The relationships between work climate and self and supervisor rated innovation.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Employee-immediate supervisor relationships Distributive Justice Psychological contract Innovation climate Co-workers relations Supervisory style Performance-reward relationship Decision making policy Employee competence Task characteristics Fairness Employee work motivation Pressure to produce Overall work climate Self-rated innovation Immediate-supervisor rated innovation
Mean
SD
Self-rated innovation
Supervisor rated innovation
3.3 2.8 3.4 3.1 3.4 3.5 3.0 3.1 4.0 3.5 3.0 4.0 2.9 3.3 3.8 3.0
1.2 1.2 1.2 1.2 1.1 1.2 1.3 1.1 1.1 1.1 1.2 1.0 1.3 1.2 0.9 1.2
.16 .11 .15 .17 .12 .16 .18 .17 .14 .14 .10 .17 7.09 .21 1.00 .13
.46 .33 .35 .43 .38 .42 .44 .40 .21 .35 .42 .25 7.35 .55 .13 1.00
Note: bold figure is non-significant; other correlations are significant at p50 .05.
positively related to both self-, and immediate supervisor-rated readiness to innovate (table 4). The more positive the employees’ perceptions of these factors the higher their readiness to innovate, and vice-versa. Unlike other work climate factors, pressure to produce showed a non-significant relationship with readiness to innovate, as rated by the employees. Furthermore, contrary to other climate facets’ relationships, it showed a negative relationship with immediate supervisor rated readiness to innovate. Putting pressure on employees to produce more is one of the common habits in organisations, especially Arab organisations. In this context, Suliman & Iles (2000) studied commitment and performance relationship in Jordan. They argued that Third World employees are under pressure to produce, because ‘there is no labour union, or its power is weak, and/or it is heavily controlled by management, as is the case in Jordan and most other Third World countries. Employees must work hard to guarantee continuity of membership’. Moreover, Benkhoff (1997) argued that putting employees under more work pressure is likely to have a negative impact on their commitment. She asserted that ‘if managers are concerned about keeping their valued employees, they should ensure that workers have competent and trustworthy superiors and feel treated fairly and with respect, and
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they should not put employees under too much work pressure. . . . There is no reason to fear that people work less hard as they become more familiar with their task over the years (Benkhoff, 1997: 128–129, researcher’s emphasis added). Hence, the higher the pressure to produce the lower the readiness to innovate, and viceversa. Given the above results and discussion, and apart from pressure to produce and readiness to innovate (self rated) relationship, it can be concluded the third hypothesis is supported.
Self Rating and Immediate Supervisor Rating Since the two groups are different (the employees and supervisors) the independent t-test together with the correlation test are used to examine the last hypothesis. From the t-test results in Table (5) it can be seen that the t value of 7.93 is significant at the .03 level. Since one of the assumptions for the validity of t-test is homogeneity of variance, the Levene’s test for homogeneity of variance was also obtained. Since the F value of 11.95 is significant (p5.05), the variance can be assumed to be not homogeneous, i.e., equal variances not assumed. These results thus indicate that differences in the means for employees (60.95) and their immediate super-
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Table 5. Results of the t-test and correlation test for SPR and ISPR. Variables
Self rating Supervisor rating
Mean
60.95 49.20
SD
7.41 12.4
Levene’s Test F
P
11.95
.00
visors (49.20) on readiness to innovate with standard deviations of 7.41 and 12.43, respectively, are significantly different. In addition, the correlation test results revealed that their is a significant, moderate and positive correlation (r = .13) between self and immediate supervisor rating. Since the value of this correlation is less than 1 difference between both ratings is assumed. Considering all these findings, it can be proposed that the last hypothesis is not established. Given the mean values of self rating (60.95) and immediate supervisor rating (49.20) and the fact that the correlation is less than 0.50 it can be suggested that there is a huge gap between the employees and immediate supervisors in rating the readiness to innovate in Jordanian industries. It is clear from the mean and standard deviation values in Table (5) that employees in Jordanian industries tend to rate their readiness to innovate more positively than their immediate supervisors. Although the issue of self rating and supervisor rating is beyond the scope of this study, it can be argued that one of the major features of individualistic culture (e.g., Jordan) is the tendency for working alone rather than in a team. Accordingly, when given a chance to appraise themselves employees tend to over estimate their performance even if they are performing weakly.
Implications and conclusions From the previous findings and discussion, several implications for both practitioners and researchers can be discussed. Organisations should understand that creating a conducive work environment that satisfies the needs of employees is essential for developing their readiness to innovate. Creating a positive innovation climate is not enough; ensuring a better balance between performance and organisational rewards is also essential. Rewarded employees are more motivated to
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T value
Sig T
Mean differences
r
p
2.93
.03
11.74
.13
.03
innovate than less rewarded employees. The manager and/or organisation pressures on employees to work for more hours or to produce more units result in employees’ stress and frustration, which negatively influence their readiness to innovate. In this context, Lake argued that management pressure on employees to produce increases an employee’s stress and reduces his/her commitment. Therefore, he suggested that flexitime may ‘reduce employee stress and build commitment. At the core of the company’s flexitime program is a recognition that employees are better workers when they have more choice over how they schedule their work and personal time’ (Lake, 1997: 3). All in all, developing a level of congruence between the actual work climate and the work climate preferences of the employee are desirable, and likely to lead to increased readiness to innovate. Furthermore, managers, especially in the Arab World, should inspire, encourage and empower female employees to innovate in their jobs. Female employees will not be ready to innovate unless they feel accepted, valued, respected and have real opportunities of risk taking. Some managers might mistakenly belief that there is no need for females’ innovation, because they are employed only in certain work categories (mainly clerical jobs), and that there is no need for innovation in these tasks. These managers need to change this belief and understand that everything and anything in the organisation is subject to change whether technological or administrative work. Thus, females’ participation in organisational innovation is not a luxury, but it is a must especially in this era of dynamic and continuously changing work environment. Moreover, managers, especially in the Arab World, should understand that the issue of social comparison is inevitable in work organizations. Accordingly, they need to treat younger and older employees fairly. Younger
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employees’ tendency to report lower levels of readiness to innovate could be attributed to the feelings of inequity. The management tends to respect, reward and overestimate older employees’ performance at the expense of younger workers. Managers should find ways to reduce the pressures of socio-cultural norms – always positive about older people and neutral or negative about younger people – on their managerial work. By creating a setting where all members (olders or youngers) feel that organisational rewards are contingent on desired behaviour and performance, management will be able to benefit from the skills and abilities of two groups, i.e., older and younger employees. Older employees are more experienced and have good understanding of work duties and responsibilities, whereas younger employees are generally known to be more dynamic, innovative, risk takers and look for challenging work. Secondly, the findings confirmed that demographic factors play an important role in influencing employees’ perceptions of work climate. Career factors (e.g., tenure) are more important than personal factors (e.g., age) in indicating this influence. Most studies use biographic variables only to describe the study sample; however, future studies should not disregard the role of these variables in affecting employees’ perceptions of climate and innovation. More specifically, future studies can try to explore the relationship between age and innovation in different contexts in order to prove or disprove what was found in this study, i.e., younger people are less innovative than older people. In addition, the current study revealed that female employees are less innovative than male employees. This result needs to be examined further by some future studies in order to reach more general conclusions about this issue. The findings also confirmed the widely accepted hypothesis that work climate plays important role in affecting employees’ behaviour and work outcomes (Suliman & Iles, 1998). Moreover, a wide gap between employees and their immediate supervisors was reported in rating employees’ readiness to innovate. There is a need for further studies to investigate the employees’ tendency, especially in individualist societies, to rate their readiness to innovate more positively than their immediate supervisors.
Acknowledgement The researchers would like to thank Professor Tudor Rickards for his valuable comments of the first drafts of this paper.
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References Abu-Faris, M. (1990), administrative innovation in public enterprises in Jordan, Master thesis, University of Jordan, Amman. Al-Dahhan, O. (1989), Innovation and innovation behaviour in organisations, Tanmiat Al-Rafidain, 26, 11–48. Al-Faleh, M. (1989), Cultural Influences on Arab Management Development: A case study of Jordan, Journal of Management Development, 6 (4), 19–33. Awamleh, N.H. (1994), Managerial innovation in the civil service in Jordan: a field study, Journal of Management Development, 13 (9), 52–60. Barnard, J. (1997), The workplace environment: What do technical workers want?, Industrial Management, 39 (5), 14–16. Baruch, Y. (1996), Self performance appraisal VS direct-manager appraisal: A case of congruence, Journal of Managerial Psychology, 11 (6), 50–65. Benkhoff, B. (1997), Disentangling organisational commitment: The dangers of OCQ for research and policy, Personnel Review, 26 (1/2), 114–131. Ferris, K. (1981), Organisational commitment and performance in professional accounting firms, Accounting, Organisations and Society, 6 (4), 317–325. Forehand, G.A. & Gilmer, B.H. (1964), Environmental variation in studies of organisational behaviour, Psychological Bulletin, 67 , 361–382. Hofstede, G. (1993), Cultural constraints in management theories, Academy of Management Executive, 7 (1), 81–94. Katz & Kahn, 1978. Katz, D. & Kahn, R. (1978), The social psychology of organisations, (2nd edition). New York: Wiley. Lake, S. (1997), Does flexitime makes business sense? Getting results . . . for the hands-on manager, Special Report, p. 3. Liden, R., Stilwell, D. and Ferris, G. (1996), The effect of supervisor and subordinate age on objective performance and subjective performance ratings, Human Relations, 49 (3), 327–347. Litwin, G. & Stringer, R. (1968), Motivation and organisational climate, Harvard University Press, Boston. Makiney, J. and Levy, P. (1998), The influence of self-ratings versus peer ratings on supervisors performance judgement, Organisational Behaviour and Human Decisions Processes, 74 (3), 212–228. Matheiu, J. & Zajac, D. (1990), A review and MetaAnalysis of the antecedents, correlates and consequences of organisational commitment. Moran, T. & Volkwein, J. (1992), The cultural approach to the formation of organisational climate, Human Relations, 45 (l), 19–47. Muna, F.A. (1980), The Arab executive, St. Martins Press, New York. Owen, P. (1991), Innovation in the 1990s, Executive Development, Vol.4 (1), 28–29. Payne, R. & Pugh, D. (1976), Organisational structure and climate, In M.D. Dunnette (eds.), Handbook of industrial and organisational psychology, Rand McNally, Chicago, 1125–1173. Pritchard, R. & Karasick, B. (1973), The effects of organisational climate on managerial job performance and job satisfaction, Organisational Behaviour and Human Performance, 9, 126–146.
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Schneider, B. & Bartlett, C. (1970), Individual differences and organisational climate (II), Personnel Psychology, 23, 493–512. Schneider, B. & Reichers, A. (1983), On the aetiology of climates, Personnel Psychology, 36, 19–39. Schneider, B. (1975), Organisational climate, Personnel Psychology, 28, 447–479. Silva, M. (1992), Toward comprehensive definition of organisational climate, Y Aplicada, 45 (4), 443– 451. Slocombe, T. and Dougherty, T. (1998), Dissecting organisational commitment and its relationship with employee behaviour, Journal of Business and Psychology, 12 (4), 469–491. Suliman & Iles, P. (2000), Is continuance commitment beneficial to organizations: Commitmentperformance relationship: A new look, Journal of Managerial Psychology, 15 (5), 407–426. Suliman, A. & Iles, P. (1999), An examination of the role work climate plays in influencing employees’ readiness to innovate: The case of Britain and Jordan, European International Business Academy, 25th annual conference, Manchester. Suliman, A. & Iles, P. (1998), The impact of work environment and organisational commitment on
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employees’ job performance in Jordanian industrial firms, Paper presented at the British Academy of Management Conference (BAM98), Nottingham Business School, Nottingham. Suliman, A. (2000), The relationships between Perceived work environment, commitment and performance in Jordanian industrial firms, Unpublished PhD thesis, Liverpool Business School, Liverpool JM University, Liverpool. Suliman, A. (in press), Towards a modernised and comprehensive definition of organizational climate, International Journal of Applied HRM. Tompson, H. & Werner, J. (1997), The impact of role conflict/facilitation on core and discretionary behaviours: Testing a mediated model, Journal of Management, 23 (4), 583–601.
Abubakr Mohyeldin Tahir Suliman is Assistant Professor of HRM/OB at the College of Business and Economics, P.O. Box 17555, Al-Ain, United Arab Emirates University, U.A.E.
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Book of the Quarter Reviewed by Pier A. Abetti Richard Leifer, Christopher M. McDermott, Gina Colarelli O’Connor, Lois S. Peters, Mark Rice, and Robert W. Veryzer, Radical Innovation: How Mature Companies can Outsmart Upstarts. Boston, Massachusetts: Harvard Business School Press, 2000, 261 pp., ISBN 0-87584903-2, hback $29.95.
NEC SPE NEC METU (Without hope and Without fear)
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his pioneering work presents an authoritative and unbiased ‘‘inside look’’ at radical innovations within ten large established corporations. It summarizes the results of a five-year, real-time, still ongoing study of twelve major innovation projects lasting ten years or more, and presumably costing hundreds of millions of dollars. An overview of the ten companies and twelve projects investigated is presented in Table 1, with the technical goals, targeted markets and status as of Spring 2000. As may be seen, the technologies and markets cover a wide spectrum of U.S. high-tech industries. Of the twelve projects, six are in production and have achieved significant market success, two have been discontinued, and four are still in the development stage. The six authors are all professors at the Lally School of Management and Technology of Rensselaer Polytechnic Institute. The expertise of this cross-functional team is impressive: organizational behavior and leadership, operations/technology management, new product development and marketing, the impact of research and technology on human behavior, technological entrepreneurship, new product design and development. However, there is one key discipline missing: economics and finance. The book is well organized and the flow of concepts, illustrations, applications, and normative deductions is easy to follow. First there is a description of the life cycle and stages of radical innovation and the uncertainties that must be overcome by the innovators and their management. The differences between radical and incremental innovation are highlighted. In addition to the
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expected technological and market uncertainties, radical innovations are subject to major organizational and resource uncertainties, which are translated into frequent organizational changes and repeated stop-go-stop again-go again funding fluctuations. The next seven chapters describe the managerial challenges that the innovators and the companies face in creating and sustaining radical innovations: 1 ‘‘Grabbing lightning’’, how to deal with and select radical ideas in the fuzzy frontend. 2. ‘‘Living with chaos’’, the development of new models for ‘‘managing’’ projects (the word may be too strong, ‘‘guiding’’ or even ‘‘living with’’ might be more appropriate). 3. ‘‘Learning about markets for radical innovation’’, which may be at best unfamiliar to the company, at worst, non-existent or undeveloped. 4. ‘‘Building the business model’’ by working through the uncertainties and finding a way to make money from new technologies in new markets. 5. ‘‘Acquiring resources and capabilities’’ in the face of hostility from ongoing operations, skeptical financial evaluators and uncommitted management. 6. ‘‘Making the transition to operations’’ while maintaining continuity of purpose, strategy and objectives. 7. ‘‘Driving radical innovation’’ through committed individual initiative rather than a systematic organization-driven process, and establishing a culture that values and promotes radical innovations and innovators. All these seven chapters follow the same pattern: a statement of the challenge, real-life examples from one or more of the twelve # Blackwell Publishers Ltd 2001. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.
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Table 1. Overview of Companies and Projects Studied Company
Project
Technical Goals
Targeted Markets
Status (Spring 2000)
Air Products
Ionic Transport Membrane
Separate oxygen from air
Analog Devices
Microchips to detect changes in speed
Developing demonstration of the technology In production (50% market share)
DuPont DuPont General Electric
Microelectromechanical Accelerometer Electron Emitter Biomax Digital X-ray
Medical, Metal fabricators, Industrial Gases, Syngas Automobile air-bag sensors Flat panel displays Packaging Medical diagnostics
General Motors
Hybrid Vehicle
Under development Seeking markets In production (Sales $50M in first quarter 2000) Demonstration vehicle
IBM
Si Ge Communications Chips
IBM
‘‘Electronic Book’’
Nortel Networks
Net-Active
Otis Elevator
Odyssey Bidirectional Elevator
Polaroid
Computer Memory
Texas Instruments
Digital Micromirror Device
projects, a discussion of the key issues and the differences from incremental innovation projects; and finally, a set of normative managerial guidelines for meeting the challenges and improving the probability of success. The final chapter ‘‘A Radical New Paradigm’’ ties together all the lessons learned and deductions of the seven previous chapters into a new corporate paradigm based on a radical innovation ‘‘hub’’, which will reduce the organizational and resource uncertainties and take advantage of the radical innovation learning curve.
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New material Degradable polyester Eliminate films, transmit images as data 50-80 miles per gallon, low pollution Switching speeds 4 times of conventional transistors High resolution displays (200 dots/ inch, 5 million color pixels) Activation of digital content over an Internet link between consumer and server Move people through very large buildings, save space Low cost, high capacity computer storage devices Create screen image by microscopic biderectional mirrors on one square inch chip
Passenger automobiles Cellular hand sets, high-speed telecom systems Display panel for PDA’s, notebook computers
In production, followed by competitors In production for IBM products and OEMs
Broadband delivery of games, software, videos
In production (Spun-off as separate company)
High-rise buildings
Mothballed
Computers
Discontinued
Conference room projectors, video walls, large board displays
In production (70–90% served market share)
In my opinion, the seven chapters delving into the intricacies and challenges of the various steps of the radical innovation process, are the most interesting and valuable to scholars, practitioners, and managers alike. The chapter on driving radical innovations and the importance of individuals is probably the best. On the other hand, the last chapter on the radical new paradigm appears to be the least convincing, and hardly does justice to the complex and controversial subject on how, where and when established companies can
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and should nurture radical innovation. There is an overlap with the much debated subject of corporate venturing that is not clarified by the appendix. This appendix describes briefly the venture capital models of one of the companies studied and three other companies not connected with the project. No clear pattern emerges. I understand that the authors are planning to continue this study of radical innovation at the corporate level, rather than at the project level. Therefore it is hoped that a new edition of this pioneering book will enlighten better the readers in this vital subject. The book is easy to read and enjoyable, because it is not written in the usual academic jargon, but rather in an almost journalistic style, made popular by the Harvard Business Review, to which the publisher is closely related. This is the kind of book that busy executives can read on airplanes, or evenings at home, but should always keep handy on their work desks for reference in case of problems with radical innovations . . . and they can expect plenty of these! Having participated in several radical innovations during 32 years at General Electric and 19 years as professor of management of technology and entrepreneurship at Rensselaer Polytechnic Institute, I may be allowed to offer some suggestions for improvement. First, as an engineer and market innovator, I was disappointed at the meager and incomplete description of the projects, their time lines and key events, the technical and market challenges, and how these were overcome. Possibly, reasons of company secrecy prevented a more detailed presentation of the projects, but the technology is obviously protected by patents, which are available to the public. In order to visualize and compare the projects, I compiled Table 1, after extracting for information in 3 to 5 different chapters for each project. Second, as mentioned above, the financial aspects are ignored completely. There is no mention of the cost to the company of each project and the cash flows, whether the successful projects are profitable, etc. While the authors are correct in emphasizing that ex ante cost benefit analyses are worthless for radical innovations, there is no reason for not performing ex post financial evaluations. All these projects entailed very high up-front expenditures. From some information in the book, it appears that the annual cost of one researcher is $250,000. A typical project lasts 10 years or more and may employ ten researchers, for a total of $25 million. When you add corporate overhead, marketing expense, specialized plant and equipment, the
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sum could easily reach $100 million. Surely, the board and the stockholders are entitled to know whether the return on investment achieved by an innovation justifies the risk taken! It also appears that the subtitle of the book ‘‘How Mature Companies Can Outsmart Upstarts’’ is misleading. There is no discussion or even mention in the book of upstarts, except a casual reference on page 1 to AOL, Amazon. com, Yahoo!, Intel, Microsoft, Dell, Genetech, and Biogen. Well, the companies and the projects described in the book have a long way to go to catch up with these former ‘‘upstarts’’, and there is no evidence that these projects will be more successful financially than the next generation of ‘‘upstarts’’ in Silicon Valley, Route 128, or elsewhere in the world. Perhaps this subtitle could be attributed to overzealous publicity copywriters, who, unfortunately, are to be found even in academic publishing houses. Finally, I must confess that I was personally troubled after reading this illuminating and sincere ‘‘inside look’’ at radical innovation. The authors honestly and convincingly show that radical innovation is a ‘‘big mess’’: long term (10+ years), highly uncertain and unpredictable, sporadic, nonlinear, stochastic and context-dependent. What is worse, higher management is unable to cope with this mess and often makes things worse for the innovators, requiring unrealistic plans, withholding support and funding, imposing frequent organization changes and in general making life difficult for everybody. Hopefully, this book will help managers do a better job . . . but it will take time to educate and convince them. In the meantime, I asked myself: if I were 50 years younger (I just turned 80), would I want to be a radical innovator in a mature company rather than in a startup? Fortunately, I do not have to make that choice now, but I still have to advise to my students. My advice would be: If you really believe that you can change the world and you are driven by a strong need for achievement, try out radical innovation and see what happens. However, do not count on continued help from management if you succeed, or sympathy if you fail. Remember the words of William the Silent (1533–1584) who founded the Dutch republic by fighting against the Spanish empire where the sun never set: ‘Men hoeft niet te hopen om te beinnen, noch te slagen om te volharden.’ (One does not have to hope in order to start an enterprise, nor is it necessary to succeed in order to persist) In conclusion, the two litmus tests of any management book are: Does the book convey
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new valuable, useable information? Does the book stimulate thinking ‘‘outside the box’’? In my opinion, the answer is definitely yes on both counts for Radical Innovation.
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Pier A. Abetti is Professor of Management, Technology and Entrepreneurship, Rensselaer Polytechnic Institute.
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Book reviews Chiesa, V. (2001) R&D Strategy and organisation: Managing technological change in dynamic contexts, Imperial College press, ISBN 1 86094 261 X, 276pp, hback, light general index.
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he book is described on the back cover as having been written for researchers including doctoral students, and is offered as an academic review of research topics. It makes claims of being of some value for secondary markets of post-graduate students, R&D managers, and people involved in technological innovation. These are rather curious claims, as they seem to me to be unusually modest concerning its secondary markets, and perhaps misleading regarding its primary one. The book assembles a set of topics that are found in earlier texts on managing technological innovation. A cursory glance at the topics and diagrams reveals many of the topics, dealt with a roughly the same intellectual level, as can be found in introductory texts on the management of technology. One that will be particularly familiar to UK readers will be the text by Brian Twiss: Managing technological innovation, (4th ed., 1992, London: Pitman). The specific topics are rather well covered. An introductory chapter sets the scene well for the rest of the book. There are chapters on strategy approaches and formulation, portfolio issues, technology acquisition, and organisational structures. I particularly liked the conciseness of the treatment, which seemed about right for the level at which the topics were presented. The author’s knowledge of the subject, and direct experience as a researcher are both in evidence. The ballast discarded is the material found in longer textbooks as extended descriptive case accounts. While these make interesting reading,
they present considerable difficulties of integration across cases. The fine grain detail in cases also tend to date rapidly. As an introductory textbook, the selected approach is acceptable. However, as an academic review, there is little attempt to critique the various topics and authorities. As presented, the reader has no way of evaluating the material, and particularly of its conceptual grounding. The inexperienced reader is left with the impression of an orthodoxy that receives no challenge or qualifying remarks regarding its scope, empirical testing, or conceptual credibility. The author has arrived at a valuable little book, but not exactly for the intended market. In that respect it captures one of the facets of technological innovation, you can never be really sure you will end up with the originally intended goal, although you may still finish with a success on your hands. Hence my earlier comments. The book deserves to be considered as a secondary text-book within undergraduate business courses. It could be the basis for the main text for a similar level course on management of innovation or technology. A serious omission is the complete absence of mention of the processes of discovery, and means of enhancing them. It is curious that researchers into processes of R&D are less interested in creativity than many R&D practitioners. It is to be hoped that the editors will address the deficiency in future volumes of an interesting series. Tudor Rickards
Qiwen Lu (2000) China’s Leap into the Information Age: Innovation and organization in the computer industry, Oxford University Press, Hardback, ISBN 0-19-829537-5, with subject index, £40.00. The book is the swan song of Qiwen Lu who died shortly before its publication. A warm congratulation is too late for Lu. However, his legacy is a bridge for those interested in
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China’s economic reform of the last two decades but mostly viewing China at a distance. Lu helps the reader to reduce that distance. # Blackwell Publishers Ltd 2001. 108 Cowley Road, Oxford OX4 1JF and 350 Main St, Malden, MA 02148, USA.
BOOK REVIEWS
Lu’s account of China’s computer industry is engaging and timely, made possible by his strengths of working both inside and outside the Chinese system. The computer industry in China was one that had a high concentration of talent and technical capacity but was low in commercial success. The critical question, since the 1970s, has been a direction of development that builds on its strength to achieve market success. Many insiders knew that an imperative for such success is a radically new institutional arrangement for both enterprises and an entire industry. The question that follows is how (the way in which) and when (timing) that the new arrangement is encouraged and nurtured. Further, for seasoned observers and those interested in transitional economies, one could make sense of Lu’s insights on learning and innovation in an age of economic reform for China in particular, and of IT industry in general from various perspectives. The book is a journey of exploration through case studies. Each is grown out of the fertile soil of China’s economic transformation from a centrally planned system. Case 1: Stone (si-tong, in Chinese, implies exploring multiple paths) is a success story with a humble beginning: a joint effort of visionary scientists from government funded research establishments and an entrepreneurial local township enterprise. On its way to become a serious competitor of its Japanese rivalries, Stone taps into the technology capacity within the government research institutions (p.29); establishes a new institutional structure of enterprise governance (p.32); integrates R&D, marketing and manufacturing (p.38); and turns a new high-tech venture into an industrial going concern (p.51). Cases 2 & 3: Legend (lian-xiang means imagination) and Founder (fang-da, suggestive of direction and arrival) are further cases. Legend is a commercial spin-off of the Research Institute of Computing Technology under the Chinese Academy of Sciences (CAS), a research hotbed with great concentration of IT talent; and, Founder is a similar venture born out of Beijing University. Lu captures Legend’s path with the expression ‘one academy, two systems’ (p.63). It sounds remarkably similar to China’s nondogmatic approach to resolving the Hong Kong handover in the political arena. As Lu puts it: ‘Legend is a flagship in China’s science and technology system reform: as a research institute-run enterprise under CAS, Legend has created a model that has pro-
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foundly transformed CAS, the very creature of central planning where rich technology resources had been accumulated but not effectively used’ (p.100). By the mid 1990s, Legend became the number one domestic PC maker. It was number three in market share in China after AST and Compaq, ahead of IBM and other international and domestic PC makers. Founder is a genuinely internationally competitive firm that is based on leading technology in Chinese-language electronics publishing systems, not on cheap labour (p.104). Underpinning its competitiveness is a new organizational structure of innovation that integrates postgraduate education into research and development. Specifically, talented graduates had the opportunity and incentives to contribute to the research and development process for the company (p.132). By the late 1990s, Founder, having established itself at home, ventured into the Japanese and Korean markets. Case 4: China Great Wall Computer (CGC) is a company that allows ‘‘mandarins becoming entrepreneurs’’ (p.151). It was a deliberate experiment in new forms of organizing the state-run computer industry in the mid-1980s by the technocrats at the Ministry of Electronics Industry (MEI). As a heritage of the old system, more than half of the mandarins were scientists and engineers. Their weakness derived from a lack of experience in turning technological capacity into commercial applications and market success. To succeed, a gradual departure from central planning was introduced with a new mechanism enabling investment decisions to be made at enterprise level so that the enterprise was able to exercise an increasing degree of financial independence. One of CGC’s strategic moves was a joint venture with IBM on product renewal and innovation (p.164). Gradually, CGC learned to open up new avenues and developing and upgrading the indigenous computer industry through a combination of indigenous design capabilities and learning from strategic alliances. CGC demonstrated that all-out privatization is not a necessary condition for a successful transformation of state-owned industries. What laid the foundation for CGC’s success was the indigenous product innovations that met specific local needs from the very beginning and the corresponding adoption of a market-oriented organizational structure (p.175). What may be drawn from the four cases, according to Lu, is the evolution of a unique top-down mode of technology learning. This was in sharp contrast to the conventional mode of technology learning among developing
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countries, including the East Asian newly industrialized economies (NIEs), whereby technology learning starts with labour-intensive assembly, and reaches the level of indigenous product design only at a later stage’’ (p178). China’s computer industry did not embark on that path. Lu’s theoretical model is summed up in Fig.6.1 as sources of dynamism among the Chinese science and technology enterprises (p.179). The book reveals how the Chinese carved a delicate ‘middle way’ between wholesale privatization (remember what happened in Russia a few years ago?) and unworkable state ownership in the historical context of economic reform. The middle ground is a steady yet inventive approach of shared
governance allowing degrees of ambiguity and compromise, coupled with progressive technology learning or capacity acquisition at enterprise level. Indeed, a strong foundation for the latter was laid through decades of state funding in R&D and a solid Soviet-style science-engineering education. For me, Lu’s lasting gift is his deep scholarly conviction that enriches an understanding of China for those who genuinely cherish learning and respect difference.
Dr Qi Xu is a Research Fellow at Manchester Business School
A. Thomson, C. Mabey, J. Story, C. Grey, and P. Iles (2001) Changing patterns of management development, Blackwells Publishers, Oxford, ISBN 0631209980, hb; 0631209999, pb (£55, £19.99), Author and general index. Management development always seems to be to be crying out for stronger and more explicit links with personal creativity and discovery processes. I approached this book primarily to see whether progress had been made in that respect. In that respect, I was disappointed. However, the material may well interest some readers of CAIM journal. The book has the feel of an authoritative text which makes a good way into a topic for the relatively inexperienced reader. My own inclination when I want to go more deeply into a subject, is to shop around I have found a metaphorical handful of such books, in the belief that they provide a ‘platform of understanding’ of the dominant perspective or perspectives. For management development, this book might be added to classics such as the Cox & Beck, (1984) which did have quite a few chapters exploring the creativity/development linkages; and perhaps to Schon’s (1983) reflective practitioner. More recently, as the authors of this volume suggest, management development has been associated with waves of interest in the learning company, and knowledge management (Senge and co-workers from the USA; Nonaka and his followers in Japan, and the Burgoyne and Pedlar studies in the UK). The authors have steered clear of these interesting if confusing regions. Rather, they offer a simple descriptive framework of management around which they furnish a wealth of self-report data from managers
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being developed, or doing the alleged developing. This locates the book primarily in the UK. References to ‘otherwhere’ (European, and sometimes Transatlantic practices) are there for comparative purposes. The sense is of an extended exploration of policy implications. The conclusions reflect on their observed increased levels of management training over the last decade, with increased corporate responsibility, and increased influence of competency-based approaches. As I re-read the conclusions I shared the authors’ tentativeness and sense of ‘inconclusions’ of the scope and limitations of corporate efforts to develop managers. Such honesty can sometimes leave the reader demanding more. Overall, I would see the volume as having value as a reference book, or secondary reading material for Human resource/organisational development researchers and teachers. It will have most appeal in the UK, with some commonwealth support.. At times of institutional squeezes on library funds, I particularly welcome Blackwell’s policy of issuing paperback and hardback versions simultaneously.
References Cox, C. & Beck, J. (1984) Management development: Advances in theory and practice, Wiley, Chichester. Schon, D. (1983) The reflective practitioner, Basic Books, NY.
Tudor Rickards
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