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Innovation is hot. Books, courses and “management gurus†trumpet the need to develop the creative potential of employees. Innovation is cast as an essential ingredient for organizational survival in turbulent environments. Innovative “learning organizations†are ones which facilitate the generation of new ideas from the entrepreneurial energy of their people. For those on the front-line, the challenge is how to organize our people and systems so that we can generate and exploit new ideas. The latest research from a team of scholars in the UK - Anand, Gardner & Morris* - approaches this in a new way, leading to some surprising results.
Organizing New Knowledge
Although a quick trawl of the Internet will provide you with a list factors that are said to enable innovation – a flat, organic structure; a high tolerance for experimentation; “idea champions†– the LBS and Oxford researchers argue that these approaches concentrate only on innovations that emerge out of existing work practices. The key issue, they argue, is not how we make existing work more innovative, but how we develop whole new structures to generate and exploit new forms of knowledge.
Elementary Knowledge?
By taking one of the most knowledge intensive industries in the world, Management Consultancy, where the main asset is the expertise and competence of staff, the researchers found that the following elements were critical in the creation of new innovation structures.
· Socialized agency – Employees will create new areas of expertise and innovation when it is a clear and obvious means to progress in their careers. In the case of consultants they are particularly motivated by their desire to become a Partner in the firm.
· Differentiated expertise – New areas of expertise and innovation become possible when employees are confronted by novel or divergent demands that require improvisation. In the management consulting industry, this happens when consultants modify and extend the recognizable tools and frameworks of their firm into distinctly novel approaches.
· Defensible turf – Structural change for innovation becomes possible when powerful stakeholders – inside or outside of the organization – perceive the utility of a new approach and provide a protected space. In the consulting industry, these spaces often come from powerful clients who support the change, but in many organizations it will come from senior managers who act as innovation sponsors.
· Organizational support – New areas of expertise and innovation become possible when the organization invests in their development. For management consultants, Partners are needed to refer long standing clients to the new knowledge area and also supply trained personnel.
Pick ‘n’ Mix
Perhaps the most surprising and important insight of this research was the interaction of these four elements.
· “Socialized agency†is indispensable. Without ambitious and motivated individuals, new practice areas simply do not emerge.
· To kick start innovation, any of the other three elements can be used.
· But, maintaining innovation over time requires ALL of the elements to become established. So, for example, a consultant who becomes a specialist in Healthcare practices will only be able to establish this as a separate area of knowledge within her firm when she engages key stakeholders to reinforce the boundary around her work and when she receives resources and support from within her organization.
For Management Consultants only?
The researchers don’t explore the implications for practitioners but there are some obvious take-aways even if you aren’t an ambitious management consultant looking for a career break.
1. If you are a change agent who wants to generate and establish new ideas in your organization then understanding how structures could serve to unleash more than one idea and be a powerful tool in establishing a whole new approach to thinking within your organization. This research emphasizes how structural change that facilitates innovation does not initially have to be a top-down initiative, but that it does require sponsorship and support from powerful stakeholders.
2. If you head up an organization the message is clear. New practice areas depend on active individuals and can’t be manufactured – in other words there is little point in simply adding divisions to your organizational chart. You need to rethink the conditions that inspire your employees to be innovative. Most critically, the view that safe, failure-tolerated environments are beneficial may need to be revisited – management consultants see the creation of a new practice area as a means of either “going up or outâ€, becoming a Partner or leaving the firm. A high stakes game that should encourage reflection on what motivates innovation and whether a certain “edge†is essential in generating the necessary energy.
* Anand, N., Gardner, H. & Morris, T. (2007). Knowledge‑based innovation: Emergence and embedding of new practice areas in management consulting, Academy of Management Journal, 50(2): 206-426.
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