Organisational culture to foster creativity and innovation
This is an essay I submitted for course work on organisational culture, lightly edited to resemble a blog post format.
Heraclitus, the Greek philosopher, said: "the only constant in life is change". That the future is uncertain is a truth that is best to recognise and accept. Change is also inevitable for organisations. The rate of change continues to increase with globalisation of new knowledge and with quicker generated ideas. If 2020 taught us anything, it is that businesses cannot stay rigid in the way they operate, and instead need to be creative and adjust to ever-changing conditions and requirements. By being adaptive and coming up with innovative solutions to new requirements, organisations can have a strategic competitive advantage as well as improved performance and better financial outcomes.
Van Den Berg and Wilderom define organisational culture as "shared perceptions of organisational work practices within organisational units that may differ from other organisational units". Richard Perrin says "organizational culture is the sum of values and rituals which serve as 'glue' to integrate the members of the organization" (Watkins). Organisational culture carries meaning as well as the values and rituals to reinforce this narrative. It is a framework to guide behaviour that is accepted by the organisation, and these behaviours turn into routines, norms, and accepted rules of game. Organisational culture is developed over time, whether organically or deliberately. It is dynamic, ever-shifting, and ever-changing in response to external and internal influences. Organisational culture impacts how much innovation and creativity is instigated. It complements rational managerial tools by playing an indirect role in influencing behaviour. It communicates through symbolism, feelings, the meaning behind language, behaviours, physical settings, and artefacts. Organisational culture is fundamental to the success of the organisation, and it determines how much the organisation promotes, encourages, or hinders creativity and innovation.
Creativity and innovation vs performance
According to Martins and Terblanche, creativity and innovation can be considered two phases in the creative process. Creativity is about coming up with useful or valuable ideas, may it be for a product, a service, or a process, and either creating new ones or improving existing ones. Innovation is about taking those ideas and implementing them. Creativity and innovation are often associated with improved performance but they are not the same. First of all, innovation can happen without improving a process. Second, innovation often means change happened but not necessarily an improvement in performance. Lastly, performance can be, (but is not required to be) an end goal or objective by which innovation can be measured by.
Environment is everything
An organisational culture that encourages creativity and innovation includes elements of risk, safety, time, freedom, and autonomy.
Leadership in the organisation should support change and risk taking accompanied with definitions of appropriate boundaries and guidelines. Some call this “chaos within guidelines”, or “freedom within context” (Judge et al). Creativity involves generating and selling new ideas, and through their actions, management should establish that experimentation and risk taking is agreeable.
Safety embodies productive collaboration, open communication, trust, empowerment, and autonomy. Collaboration between individuals and teams is anchored in psychological safety where group interactions include constructive and frequent feedback loops, open communication patterns, and healthy conflict handling. When people feel safe at work, they are not afraid to make mistakes, because mistakes are considered as opportunities to learn and grow, and failures as the building blocks to success. When teams feel safe to collaborate, it has been shown that diverse teams consider more options, are better with customer orientation, and come up with richer ideas.
Management should trust their people to do their jobs, and empower them to explore within a set of collective objectives rather than try to control them. Individuals and teams should, within some guiding principles, have the autonomy to reach their goals however they wish. Researchers have found a clear relationship between autonomy and innovation levels. They suggest an opposite approach to a heavy top-down management, to instead balance the operational autonomy of the team with the strategic autonomy of management.
Allowing time, availability and flexibility can help increase creativity and innovation. The organisation should make resources such as technology, information, people, and time available. Pressure to get the work done does not leave the team enough time to play with new ideas. Work schedules should allow for time to play and support exploration. Some companies offer the teams a percentage of work time as investment time. Furthermore, decision making should not hinge on higher ups, and should be timely to keep momentum going, instead of stalling it.
Finally motivation can have varying effects on creativity and innovation. Individual motivation has been found to affect innovative efforts and performance. They also found that intrinsic motivation tops extrinsic motivation with regards to innovative performance and quality. In Drive (2012), Pink says that the secrets to high performance are autonomy, mastery, and purpose. External rewards can be powerful when doing routine tasks, but in advanced economies or knowledge-based industries, where creative thinking is required to complete the task, these same rewards work against us and performance plummets. In Primed to Perform (2015), Doshi and McGregor describe the "motive spectrum". It includes three "direct" or intrinsic factors that contribute to higher motivation: play, purpose, and potential; and three "indirect" or extrinsic factors that lower motivation: emotional pressure, economic pressure, and inertia. They suggest that higher motivation drives adaptive performance, which in turn fuels resiliency, creativity, better customer experience, higher business performance, and provide a competitive advantage. To achieve this, organisations need to build a highly motivated work culture. Placing an emphasis on personalised intrinsic rewards leads to increased levels of innovation. Additionally, by giving the team autonomy to connect with the end customer, the team learns of possible issues the customers have, and develop empathy for the customer. This helps to develop individual or team ownership as well as a feeling of intrinsic purpose.
Different approaches in different contexts
The above suggestions for organisational culture to foster creativity and innovation are a conflict between opposing extremes, for example freedom and control or flexibility and focus. Hofstede's (2001) power distance dimension defines the extent in which people accept and expect the inequality in power distribution. Hofstede also discusses an individualism vs collectivism dimension which refers to how people co-exist, co-depend, view themselves as independent, and consider the good of the one vs the good of their wider social group.
Individual innovation behaviour depends on organisational culture with low power distance. Martins and Terblanche suggest that a flatter organisational structure, characterised with shared decision making, informal rules, loosely defined roles and responsibilities, and flexible authority is conducive to creativity and innovation. Generally, creativity is facilitated when roles are broadly defined, without deep specialisation, but with overlapping domain knowledge and tasks (what we call cross-functional teams), all which results in broader perspective and diverse ideas. Whereas centralisation, rigidity, control, predictability, stability, and order will inhibit innovation.
Multiple studies confirmed that high power distance culture hinders creativity, i.e. innovative idea generation. They established that high power distance can decrease information sharing, collaboration, and the sense of autonomy in individuals, all of which does not promote creativity. On the other hand, high power distance culture can have a positive impact on innovative idea implementation which involves giving defined instructions, maximising resources allocation, and quickly producing given ideas.
For organisational culture to support creativity and innovation, organisations need to encourage risk tolerance within limitations, provide psychological safety for mistakes, make resources available, be flexible with time, and promote freedom and autonomy. They should work towards a low power distance culture; a flatter hierarchy structure, with broadly defined roles, quick feedback loops, and specific guidelines and goals.
- Doshi, N., & McGregor, L. (2015). Primed to Perform. How to Build the Highest Performing Cultures Through the Science of Total Motivation. Harper Business.
- Hofstede, G. (c2001). Culture's consequences: comparing values, behaviors, institutions, and organizations across nations. 2nd ed., Thousand Oaks, Calif.; Sage Publications.
- Judge, W. Q., Fryxell, G. E., & Dooley, R. S. (1997). The new task of R&D management: Creating goal-directed communities for innovation. California Management Review, 3
- Martins, E. C., & Terblanche, F. (2003). Building organisational culture that stimulates creativity and innovation. In European Journal of Innovation Management (Vol. 6, Issue 1)
- Pink, D., (2012). Drive: The Surprising Truth about What Motivates Us. Riverhead Books.
- Van Den Berg, P. T., & Wilderom, C. P. M. (2004). Defining, measuring, and comparing organisational cultures. In Applied Psychology (Vol. 53, Issue 4).
- Watkins, M. (2013, May 15). What is organizational culture? And why should we care? Harvard Business Review. https://hbr.org/2013/05/what-is-organizational-culture.