Organizational Culture, Innovation and

Creativity

Organizational culture innovation and creativity are interrelated. Organizational culture plays a

vital role for encouraging innovation and creativity in any company. Organizational culture is

also an important determinant of organizational success.

Organizational Culture:

Organizational culture is culture starts with leadership, is reinforced with the accumulated

learning of organizational members and is powerful set of forces that determine human behavior.

There is no exact definition for organizational culture it is explained with mere examples. For

example in an organization, the way we do things around here i.e. consistent way of performing

tasks, solving problems , resolving conflicts, interaction with customers and treating employees

all these tasks comes together to form organizational culture.

Work culture is a totality of various levels of interaction among organizational factors and

organismic factors interact among themselves at various levels.

Functions of organizational culture are behavioral control, encouraging stability and provide

source of identity.

Nature of organizational culture:

The culture of an organization may reflect in various forms adopted by the organizations these

could be

physical infrastructure

routine behavior, language, ceremonies

gender equality, equality in payment

dominant values such as quality, efficiency

Philosophy that guides the organization’s policies towards it employees and

customers like customer first and customer is king and manner in which employee’s deals

with customers.

Individual factors wont reflect organizational culture but combined together

reflect organizational culture. Large organization has a dominant culture and also sub

cultures exist.

Dominant culture is followed by every one in organization and sub culture is

followed by only particular department or group.

Levels of organizational culture:

At level-1: organizational culture can be observed in the form of physical objects,

technology and other visible forms of behavior like ceremonies and rituals.

At level -2: there is greater awareness and internalization of culture values. people

in the organization try solutions of a problem in ways which have been tried and tested

earlier.

At level-3: a process of conversion, where the group repeatedly observes that the

method that was tried works most of the time, it becomes the preferred solution and get

converts into dominant value orientation.

Common Myths about organizational culture:

Organizational culture is same as organizational climate: these are not same but

two different concepts in organization. Organization culture is a macro phenomenon

which deals with beliefs, assumptions, values and behaviors

reflecting commonality in people working together. Where as organizational

climate is micro phenomenon and reflects how employees in an organization feel about

the characteristics and quality of culture like morale, goodwill, employee relations, job

satisfaction etc.

Culture is same as group think: culture refers to shared assumptions and beliefs; it

is likely to cause confusion, it is characterized by symbols, beliefs and artifacts. Where

as group think refers to group member hiding any differences in how they feel and think

and behave in a certain way, it is mostly happened in face to face situations.

Culture is same as organization: culture is a result of sustained interaction among

people in organization and exists commonly in thoughts, feelings and behavior of people.

Where as organization consists of a set of expectations and a system of rewards and

punishment substained by rules, regulation and norms of behavior.

Culture is a social structure: social structure in various collectives exhibit tangible

and specific ways in which people relate to one another overtly. However, culture

operates on a system of unseen, abstract and emotionally loaded forms which guide

organizational members to deal with their physical and social needs.

Types of organizational culture:

Types are explained easily with the help of competing value frame work.

Competing value frame work has proven to be a helpful framework for assessing and profiling

the dominant cultures of organization. The first dimension places the values of flexibility,

discretion and dynamism at one end of the scale with stability, order and control on the other.

That means it emphasis on adaption and effectiveness. The second dimensions is marked by

internal orientation, integration and unity at one end of the scale with external orientation,

differentiation and rivalry on the other.

Hierarchy:

Hierarchical organizations share similarities with the stereotypical large bureaucratic

corporation. They are defined by stability and control as well as internal focus and integration.

They value standardization, control and well defined structure for authority and decision making.

Examples are MC Donald’s and government agencies like department of motor vehicles .

Market:

These companies are similar to hierarchical companies in terms of stability and control but differ

in terms of focus. These organizations have external orientation and they value differentiation

over integration. This began largely because of the competitive challenges from overseas. These

focused on relationships with suppliers, customers, contractors, unions, legislators, consultants

and regulators. These organizational feel that through external relations they can achieve success.

Organizations are more concerned on competitiveness and productivity.

Examples are General electric (GE), during leadership of former CEO jack wetch.

Clan:

Clan is similar to hierarchy in terms of inward focus with concern for integration but they

emphasis on discretion rather than the stability and control of control. The organizations

operated more like families hence they valued cohesion, a humane working environment. It

emphasis on teamwork and sociality, needs spaces that foster. Companies were made up of semi

–autonomous teams that had the ability to hire and fire their own members and employees were

encouraged to participate in determining how things would get done.

Example is Japanese firms in the late 70’s and 80’s.

Adhocracy:

Adhocracy is similar to clan in that emphasizes on discretion and flexibility but instead of inward

focus it focuses externally and concern for differentiation. This approach developed to deal with

the fast paced and volatile business environment, social, economic and technological changes

made older corporate attitudes and tactics less efficient. These organizations value flexibility,

adaptability.

Examples is Google, which develops innovative web tools, taking advantage of entrepreneurial

software engineers and cutting – edge processes and technologies.

Case Study:

Organizational culture at NIIT:

NIIT was founded in 1981 by two IIT, Delhi graduates, Rajendra S Pawar and Vijay K Thadani

with a vision of meeting basic requirements for IT talent in a world moving into an information

based economy. They had anticipations about the unpreparedness of Indian society to cope with

the forthcoming information age and adopted the mission “bringing people and computers

together, successfully”. Initially, NIIT delivered IT training to a broad spectrum of people – from

students seeking a career in computers to IT professionals requiring advanced skills; from

managers giving their careers an edge, to school children using computers as a learning too.

NIIT’s innovative offerings demonstrated the company’s ability to constantly renew itself to

anticipate future technology trends. From a computer training institute, NIIT has emerged as a

global IT solutions corporation offering knowledge solutions along with developing software

solutions along with developing software solutions. Headquartered in New Delhi, India, NIIT

operated through 100% subsidiaries in the US, Asia Pacific, Europe, and Japan and has

operations in about 40 countries.

Its mission keeps pace with the developments in the field of IT is evolved through organization

wide discussions which helps develop commitment among employees. The organization operates

with the help of task teams designed for specific customer requirements for a specific period to

carry out the work. Team culture and openness are emphasized a great deal. NIIT,s corporate

culture focuses on values such as quality, creativity, and customer satisfaction. The quality

culture of NIIT has been the result of the sustained efforts of its management – perpetuated

through induction, socialization, reinforcement, innovation, and concern for internal and external

customers. The quality culture is ingrained at NIIT in such a way that the priority is to prevent

mistakes rather than rectify them. Also, quality efforts are backed by results, which are rewarded.

Employees are treated as intellectual capital and are looked after well. The happy and committed

employees ensure customer satisfaction and this has got them wide acceptance across the globe.

It has got well designed mechanisms for monitoring the quality for its products, services and or

software processes. Most of NIIT’s businesses have ISO 9000 certification. The work culture at

NIIT has gone through all the stages of culture development like symbols, behavior,

organizational values, attitudes, and shared assumptions, and probably this is the reason it has

been able to sustain it.

PRO’S OF ORGANIZATIONAL CULTURE:

Strong organizational culture will attract high level talent. Best people can be

choosy and they will strongly consider whether a company has effective organizational

culture and how workers get along with each other.

Strong organizational culture will help to keep your top level talent.

A strong culture creates energy and momentum. Once a strong organizational

culture is built, it will gain a momentum of its own and will help to allow people to feel

valued and express themselves freely. It will have positive influence on organization.

Strong organizational culture will change mindset of employees positively like

loving work they are doing etc. which intern increase efficiency.

It will also make everyone more efficient and successful.

Con’s of organizational culture:

Positive change won’t occur if we don’t make it a practice to

Communicate a sound rationale for every undertaking and change

Appoint the right people to the right position

Seize upon every opportunity to improve the culture whether it is from your

adversaries, competitors or simply some one else’s misfortune.

Innovation:

In today’s ever-changing economic landscape, inventiveness has become a key factor

influencing strategic planning. Innovation generally refers to the creation of better or

more effective products, processes, technologies, or ideas that are accepted

by markets, governments, and society. Innovation differs from invention or renovation in

that innovation generally signifies a substantial positive change compared to incremental

changes.

The goal of innovation is to create business value by developing ideas from mind to

market. Most of companies find tremendously difficult to achieve.

Drivers of innovation:

There are basically four drivers which will gradually transform the manner in which

companies innovate and for each driver new innovative principles will arise.

Co-creating value with customers and tapping knowledge about users

Companies have to open their innovation processes. Companies must listen and

dialogue with customers and give them access to all kinds of information. Customer’s

needs and behavior must be considered as a integral part of a company’s strategy and

business model. Companies must be transparent and evaluate risk with their customers.

Tapping hidden knowledge from customers and involving users in the beginning of

innovation processes requires different knowledge and competencies than has previously

been necessary for innovation.

Global knowledge sourcing and collaborative networks:

Companies will form collaborative networks and engage themselves in binding

innovation partnerships. No single companies regardless of size will posses all the

knowledge and resources needed to innovate on its own. Hence companies will have to

access and combine globally-dispersed knowledge on a larger scale than ever seen

before.

Global challenges as a driver of innovation:

Companies will constantly search for new business opportunities, and they will

realize that global challenges such as climate change, the supply of clean water,

epidemics and social needs constitute a huge new market. By creating new and more

responsible and sustainable solutions, companies can cultivate new business

opportunities. ‘Corporate social innovation’ may be an important new business area for

private companies and a core driver of innovation.

Example: Global challenges such as climate change, access to clean water and

various social needs have until now been regarded as political challenges and not as

business challenges, implying that the responsibility for finding solutions rested with the

political world. Companies responded to requests and demands put forward by public

sector institutions by providing the required service or product.

Public sector challenges as a driver of innovation:

The demand for innovation in public services would appear obvious. However,

the difficulties also seem quite substantial. Citizens look for more individualized welfare

services of higher quality, but the amount of resources allocated to the welfare system are

under ressure, and the system’s ability to innovate can be questioned. These challenges

open a huge territory for private companies if they can find ways for innovating with the

owners of welfare institutions, but the path into public services is a road with many

political obstacles.

Types of Innovation

There are three main types of innovation (process, product/service, and strategy), each of which

can vary in the degree of newness (incremental to radical) and impact (sustaining versus

Discontinuous).

Process Innovation:

Process innovation became an important with the rise of the quality and continuous improvement

movements and, then again, with the more recent attention directed at change management,

organizational learning and knowledge management.

Product/Service Innovation:

Incremental product/service innovation is oriented toward improving the features and

functionality of existing products and services. Radical product/service innovation is oriented

toward creating wholly new products and/or services. Product life cycles, in particular, have

become shorter and shorter, causing business survival to depend on new product development

and, increasingly, on the speed of innovation in order to develop and bring new products to

market faster than the competition. Organizations must direct

greater attention to new product development, while maintaining and improving their existing

products. Discontinuous products and services are increasingly likely with ever-faster new

product/service development. Organizations must be constantly on the lookout for discontinuous

new products and/or services. Although product/service innovation and process innovation are

not the same thing, they are often interconnected.

Strategy or Business Concept Innovation:

It is, of course, possible to incrementally improve one’s business strategy but radical business

concept innovation is now paramount. If radical business concept innovation is successful in

accomplishing these objectives,

Radical innovation:

Radical innovation is confronted with uncertainties in both technological and market

aspects. In radical innovation requires new knowledge and new resources and therefore it

is considered as competence destroying. In an radical innovation we should create market

for over product.

Incremental innovation:

It’s a step by step process. It will build up on existing knowledge and resources within a

certain company so it is considered as competence enhancing. It involves modest

technological changes and the existing products on the market will remain competitive.

Innovation Zones:

In product life cycle, an innovation has to taken place at various zones at various stages of

life cycle.

Product leadership zones are privileged during the growth phase

Customer intimacy and operational excellence zones are privileged at mature

phase.

Category renewal is for categories that have lost the ability to sustain future value

creation.

In product leadership zone: there can be basically four types of innovation

1) Disruptive innovation: this type of innovation creates new market categories based on

discontinuous technology change.

2) Application innovation: it is also called solution innovation, trying to develop new

markets for existing products.

3) Product innovation: for existing markets, innovating new products. This form of

innovation is normally highly dependent on fast time to market.

4) Platform innovation: These types of innovation interpose a simplifying layer to mask

an underlying legacy of complexity and complication, thereby freeing a next

generation of offers to focus on new value propositions.

Customer intimacy zone:

There are our types of innovations:

1) Line-extension innovation: this type of innovation makes structural modifications

to an established offer to create a distinctive subcategory. Goal is to expand

market share with existing product.

2) Enhancement innovation: this type of innovation continues the trajectory begun

by line extension, driving innovation into finer and finer elements. The goal is to

improve existing offers in existing markets by modifying a single dimension,

there by reawakening customer interest.

3) Experiential innovation: it’s based on ultimate refinement of customer intimacy,

the value is based not on differentiating the functionality but rather the experience

of the offering. It is particularly suited to consumer markets.

4) Marketing innovation: this type of innovation focuses on differentiating the

interaction with a prospective customer during the purchase process.

Operational excellence zone:

1) Value- engineering innovation: this type of innovation extracts cost from the

materials and manufacturing of an established offer without changing its external

properties.

2) Integration innovation: this type of innovation reduces the customer’s cost of

maintaining a complex operation by integrating its many disparate elements into

single centrally managed system.

3) Process innovation: this type of innovation focuses on improving profit margins

by extracting waste not from the offer itself but from the enabling processes that

produce it.

4) Value migration innovation: this typeof innovation consist of redirecting the

business model away from a commoditizing element in the market’s value chain

towards one richer in margins.

Category renewal zone:

1) Organic innovation: the uses its internal resources to reposition itself into a

growth category. For example solving problem faced by most valued customers

etc.

2) Acquisition innovation: it solves the problem of category renewal externally

through merger and acquisitions.

Creativity:

Creativity refers to the phenomenon whereby a person creates something new that has some

kind of value. What counts as "new" may be in reference to the individual creator, or to the

society or domain within which the novelty occurs. What counts as "valuable" is similarly

defined in a variety of ways.A creative product is one that is different from all previously

existing products intended for similar purposes, along one or more substantial dimensions. A

certain consideration of context is appropriate in the evaluation of novelty.

Organizational culture influence on creativity and innovation:

Organizational support is required for creativity and innovation. Various organizational factors

that effect creativity and innovation are

1) Organizational encouragement encompasses several aspects, including encouragement of risk

taking and idea generation, supportive evaluation of ideas, collaborative idea flow, and participative

management and decision making. Open flow of communication across groups in the organization is

required for creativity and innovation. Organizational structures and a culture that supports, or perhaps

more appropriately does not punish, this type of communication will be more likely to have more effective

creativity and innovation.

2) Supervisory encouragement Supervisory encouragement includes clarity of team goals, supervisory

support of the team’s work and ideas, and an environment where open interactions are supported.

Innovation effectiveness is positively associated with group cohesiveness, provided that an open,

Confrontive climate for conflict resolution exists within the innovation team. Absent such a climate,

cohesiveness is negatively related to the level of innovation in the team.

3) Work group encouragement: work group encouragement focuses on diversity among group

members and constructive challenging among team members. Creative performance is increased when

diversity is allowed, when people with dissimilar frames of reference can exchange ideas, and when the

organization can effectively integrate creative personalities into the organizational mainstream. The

organization that possesses these attributes must have a culture that strongly values, tolerates, and even

embraces diversity, particularly diversity of personalities.

4) Freedom and autonomy: Freedom and autonomy here are related to granting and allowing freedom

and autonomy to employees for determining the means by which to achieve a goal, not necessarily

autonomy for selecting what goals to go after.

5) Resources: resources refer to money and time, not providing ample time lead to distrust

and burnout. Providing more time than required can take way sense of challenge and

decrease creative performance. Enough amount of money should be provided so that

employees will focus on work rather than finding resources.

6) Control: it is one factor that acts as organizational obstacle for creativity and innovation.

Control in decision making, control of information flow, or even perceived control in the form of reward

systems that put too much emphasis on increasing extrinsic motivation. A culture that supports and

encourages control will result in diminished creativity and innovation. The primary reason for this is that

control negatively affects intrinsic motivation.

According to burns and stalker

Mechanistic organizations were characterized as hierarchical, highly structured organizations

with well-defined, formal roles and positions relative to others in the organization, with

communication flowing primarily vertically. Organic organizations, by contrast, were typified by

their fluid organizational design, with departments and teams forming and reforming to address

new problems and opportunities, with communication flowing primarily laterally. Organic

organizations form to deal with unpredictability and volatility in an organization’s environment.

Compared with a mechanistic organization, an organic one facilitated greater creativity and

innovation. Centralized decision making may enhance an organization’s ability to implement

innovations, particularly in a more stable environment.

According to amabile,

There are six support scales that would differentiate between high- creativity climate and low

creativity climate including (a) organizational encouragement, (b) supervisory encouragement,

(c) Work group supports, (d) freedom, (e) sufficient resources, and (f) challenge.

Work has focused on three ingredients for creative output (a) domain expertise, (b) creative-

thinking skills, and (c) intrinsic motivation.

Acc to rosabeth M.kanter,

Innovation is most likely to occur in organizations that (a) have integrative structures, (b)

emphasize diversity, (c) have multiple structural linkages inside and outside the organization, (d)

have intersecting territories, (e) have collective pride and faith in people’s talents, and (f)

emphasize collaboration and teamwork.

Case study:Organizational culture that facilitates radical innovation in a

mature small to medium sized company

A case study of a small to medium sized firm based in the UK was used as a basis for examining

the innovation culture that facilitates radical innovation. A case study provides the opportunity to

investigates a contemporary phenomenon within its real-life context, especially when the

boundaries between phenomenon and context are not clearly evident. The firm in the case study

is Cerulean, an international company that designs, manufactures, markets and supports a range

of quality measurement equipment for the tobacco industry and specialized tube packing

machines world-wide. Over the last ten years the company has grown to be a dominant player in

its international market sectors but now finds itself unable to provide the “stream of innovative

new products” that it believes is necessary to survive and grow. The company had a history of

incremental innovation but had been unsuccessful in generating radical innovations from within.

The perception from within the company was that the organizational culture –“the way we do

things round here” was inhibiting radical innovation. Emphasis was placed on successful

outcomes, risk was avoided and speculative or exploratory developments were avoided, in order

to focus on product enhancements. Recent product introductions have been “me too” products

that responded to a competitor offering or an evolution of an existing product. The last example

of a product that included a radical innovation was conceived about five years ago. This radical

innovation came from the use of an external consultancy to create the concept that was later

developed and productionized within Cerulean. In order for the company to prosper, it was

believed that it had to develop the capability to develop new lines of products as well as

improving existing ones. Regaining the entrepreneurial spirit of the company from ten years

previously was desired, but in a manner that could co-exist along with the existing business.

Recent years had seen many improvements in using modern methods and procedures and these

were also essential for efficient operation of the business. Cerulean is an operating division of

Molins plc. It has a head office in Milton Keynes in the UK. Design, development and

manufacturing are all carried out exclusively at the Milton Keynes head office. This facility also

contains the administration functions, Sales and Customer Service for the Europe, Middle East

and Africa regions. There are service, or sales and service centers in the USA, Brazil, Venezuela,

South Africa, Germany, India, Malaysia, and China. There are 105 people employed by the

company with around 70 of these being based at the Milton Keynes head office. The

development team within Cerulean was the subject of the research. This is a team of around 15

development engineers with length of service ranging from less than one year to over thirty

years. The team comprises skills in mechanical, electrical, electronic and software engineering.

The nine attributes of Cerulean’s existing organization culture that enable and inhibit the

development of a radical innovation culture such as Freedom, attitude to risk, development,

external confidence, internal confidence, external perspective, clear objective, team constitution

and company infrastructure.

But for radical innovation in cerulean’s, The change is necessary in Development team to change

their underlying beliefs about risk taking to a position where risky decisions are believed to be

opportunities for exploration and exploitation. By changing the basic assumptions and values,

behavior changes can be embedded in the organization as “the way we do things around here”,

thus leading to the desired radical innovation culture. In this way a social heritage for “radical-

ness” could be created.

References:

1) Introduction to Organizational culture

2) Organizational culture: is it a plus or minus in your organization by Charlie Connolly

3) What Do We Know about Developing and Sustaining a Culture of Innovation by

L.Aiman-Smith 2004

4) Four organizational culture types by bruce M.tharp

5) Innovation by Kathryn A.baker

6) New nature of innovation by jose santos, dirk pillat

7) Organizational Culture’s Influence on Creativity and Innovation: A Review of the

Literature and Implications for Human Resource Development by Laird D. McLean

8) Case study: Developing an organizational culture that facilitates radical innovation in a

mature small to medium sized company: Emergent findings

Book:

Organizational behavior by Stephen p.robbins