Organizational Culture And Innovation

Organizational culture and innovation

Today companies have to deal with an increasing competition in the business world. To face it, they have to be more and more competitive. “Their success and survival depend on creativity, innovation, discovery and inventiveness” (Martins and Terblanche, 2003). Consumers are always looking for new products in the forefront of progress. Innovation can be define like : “” (dictionary) Companies understand this need and they want to satisfy it but they wonder how. Many authors like Shuster (1986), Pheysey (1993), Robbins (1996), Ahmed (1998) and Martell (1989) have emphasized the importance of organizational culture in this context. Perhaps the most commonly know definition of organizational culture is “the way we do things around here” (Lundy and cowling, 1996). But to be more precise it can also be define as “a system of shared meaning held by members that distinguishes the organization from other organizations. This system of shared meaning is, on closer examination, a set of key characteristics that the organization values. Recent research suggest that seven primary characteristics, in aggregate, capture the essence of an organization’s culture : innovation and risk taking, attention to detail, outcome orientation, peoples orientation, team orientation , aggressiveness and stability” (Robbins, 2005). “Organizational culture appears to have an influence on the degree to which creativity and innovation are stimulated in an organization.[…] Involving personnel in decision making, recruiting and appointing personnel with creativity characteristics, setting standards for work performance and giving regular feedback” (Martins and Terblanche, 2003) are some of the points on which companies can work.

This leads to the question : How can organizational culture have an influence on innovation and creativity of a company?

The essay will first explain the existing link between organizational culture and innovation. Then it will set the determinants of organizational culture which have an impact on innovation in organization. And finally, it will illustrate the debate thanks to the example of one of the most innovative enterprise in the world : 3M.

What is the link between innovation and organizational culture?

Many researches and studies shown that there is an incontestable link between the organizational culture and the innovation in a company.

According to Tushman and O’Reilly (1997), “organizational culture lies at the heart of the organization innovation.” The fundamental elements of organizational culture: values, beliefs, organization, hierarchy influence innovation in two manners. First, through socialization processes in organization, members of the company learn which attitude is acceptable and how the organization should work. “Norms develop and are accepted and shared by individuals. In accordance with shared norms, individuals will make assumptions about whether creative and innovative behavior forms part of the way which the organization operates” (Tesluk et al, 1997). The second manner, pass by the basic values and beliefs. They become part of behavior and activity and are replicated in organization, procedures, structures, rules. “This structure and so on impact directly on creativity in the work place for example, by providing resource support to pursue the development of new ideas” (Tesluk et al, 1997). This method permit to make understand to every members of the organization what is whether valuable and how they have to work on it.

“Organizational culture affects the extent to which creative solution are encouraged supported and implemented” (Martins and Terblanche, 2003).

We can explain the relationship between organizational culture and innovation as follows . Companies’ environment and it reaction to different circumstances, the management’s values and decisions, the configuration of the organization and the valuable technological elements of the company are several constituent of the organization which support creativity and innovation. First, the external environment of the company has a role to play in the way organization will innovate. Indeed, consumer needs, economical crisis or increase of the competitiveness encourage or not the company to take risk. Secondly, an incident within or outside the enterprise will make the firm react to it. And those events, external or not, can stimulate the organization and make it reply by an innovation strategy. Moreover, the management in the business has also an influence on innovation. Indeed, the communication, the diversity and the trust between the members of the enterprise are some of the important factors which are going to stimulate the creativity of the employees. Then, the structure of the organization itself can be a point of creation of innovation. For example, a flexible configuration, a share of decision making, a possibility to use informal communication and a supple regulation and authority permit to establish an atmosphere of innovation in the company. Finally, the technology, the human factors and whether the access to facilities help the firm to introduce an innovative strategy.

All this proof the existing link between Organizational culture and innovation. By organizing the company in a certain way which follow an objective of innovative strategy the firm has better chance to create innovation. This strategy need to take into account the external environment and the least employee.

What determinants of organizational culture stimulate innovation in companies?

Many researchers (Filipczak 1997, Tesluk et al 1997, O’Reilly 1989..etc) have studied the determinants of organizational culture which could have an influence on implementing innovation in a firm. Today, this influence can be divided into five parts.

The first determinants of organizational culture which stimulate innovation is the strategy adopted by the company. “An innovation strategy is a strategy that promotes the development and implementation of new products and services”(Robbins, 1996). Covey (1993), argue that the origin of innovation is in a strategy focused on future. But what company should not forget is its main objective, which is to solving consumers’ problems. So, to be innovative, enterprises strategy has to answer to costumer’s need in focusing on future. It is also important that each members of the company understand the objective and the gap between the existing situation and the vision or mission to be capable of acting creatively. In this way, they will easily integrate the objective as

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