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Yevgeny Sinyakov. Role of Innovation Culture during the Crisis Period.

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 Role
of
Innovation
Culture
during
the Crisis Period
Abstract
: This article states the role of innovation culture in the life of the enterprise during the crisis period. Old management models with “in
-
built system errors” have exhausted themselves
,
to carry out corrections it is necessary to know what exactly must be changed and in what way
.
What is connection between values of the innovation culture and business results
? What
are
the
elements
of
organizational
culture
? What
organizational
mechanism
s
provide
translation
of
the
values
from
the
company
leaders
and
higher
management
to
the
employees
?
Principles of values
-
based management
. Key words
: innovation culture
, organizational culture
, management model
, values, innovations, crisis, values
-
based
management
Information on the author
: Sinyakov Yevgeny Viktorovich
Managing Partner of the Consulting Company TRIUNA Leaders
(
www.triuna.ru
),
Russia, member of the Global Cultur
al Transformation Tools (CTT) Network
. Business
coach
, trainer and consultant
. En
gaged in practical aspects of efficient organizational culture building for over 10 years
. Earlier he held senior positions in representatives of
international
companies in Moscow. T
he
only
in
Russia
fully
certified
consultant
(
Stages
1 and
2)
for application of Cultural Transformation Tools
, developed by international guru of management Richard Barrett (the USA)
. Studied
leadership
coaching
in
the
International
Academy
of Transformation Coac
hing and Leadership from Peter Wrycza
in Moscow and Bali Island, Indonesia.
Received
qualification
of
the
consulting
psychologist in Institute of Practical Psychology (SU
-
HSE)
. Received
MBA
grade
major
“
Strategic
Management
” in
Graduate School of International Buisness under the Academy National Economy (
GSIB ANE
). At
the
present
time
Yevgeny conducts
his
author
’
s
course
in Leadership for
students of MBA Prog
ram
in the Higher School of Economics (SU
-
HSE)
. Frequent
speaker
and
facilitator
at
conferences
, panel
discussions
, brainstorming
in
subjects
“
Ideas
Management
”, “
Connection of Human Factor with Business
-
Results”, “Role of Innovation C
ulture in the En
terprise
Development”, “Genius Attraction and Withholding”
, “Integration of Different Organizational Cultures at Merger and Acquisition” and etc. Autho
r of the educational course “Road
Map of Innovation Culture Building”
. During
the
economic
crisis
companies
faced
the
fact
that
old
and
well
-
tested
management
models
ceased
to
bring
the
desired
efficiency
and
resources were not enough not only to develop but to survive
.
Every manager faced the question what to do under the present conditions of uncertainty,
as the business would not be able to
operate with the same working efficiency they had had before the crisis
.
Of course, if the situation allows
,
one can try to wait till the crisis ends, reducing expenses to the minimum, but there is nobody who can guarantee that the crisis will finish quickly, so such strategy will work out until there is nothing to reduce
.
This means that besides expenses reduction there must be some other approaches for business stability preservation
. Right
here
another
alternative
appears
—
to
use
general crisis as
an opportunity for adjustment of management models in the company
.
What exactly needs adjustment
in the existing management models
?
The answer is simple –
everything that influences business results negatively
. It
is
obvious
that
each
company
is
a
unique
social
organism
, which
has
its strengths and weaknesses
.
And these weaknesses can be proved themselves in different ways
. But
what
is
interesting
—
try
to
ask
in
the
business audience to raise hands those in whose companies there are disagreements between functional departments, let’s say between “sales” and “logistics” or “finances” or “production”
... Almost
three
fourths
of
the
audience
will
raise
hands
! Why
does
this
happen
, in
spite
of
the
fact
that
representatives
of
companies
of
different
scales
and
industries
may
sit
in
the
audience
?
It
appears
that
such
disagreements
or
even
smoldering
–
burning
-
up conflicts are “the in
-
built system error” of the existing management model of the many companies
. Although
many
managers
know
about
these
disagreements
they
consider
them
as
though unpleasant but natural business component
s
.
There
is
another
approach
when
such
tense
inter
-
functional
interrelations
are
drawn up by the manager on purpose in order to develop “internal competition”
. In the last situation the
guiding principle can be a well
-
known statement “divide and rule”. Without
close
analysis
of
reasons
for
such
behavior
of
the
managers
, let
’
s
note
that
such
management
style
has
strengthening
of
personal
power
as
its
priority
but
not
possible
economic
business
factors
, as it is impossible to expect conscientious attitude to the quality of their work and higher efficiency from the personnel in the environment uncomfortable for them
.
The situation is worsen
ed
by the fact that very often strain in human relations in the team is slopped out onto the customers
. It
can
come
to
the
point
when
nobody
in
the
company
is
shocked
with
such
“
unofficial
” attitude to the customers: “we just hate them”
. As
the
majority
of
enterprises
has
found
themselves
face
to
face
with
crisis
and
they
cannot
look
for
any
help
from
outside
,
it is necessary to activate own internal resources during short time, in particular to increase employees’ engagement in the company’s life
.
For
example
, in
conditions
of
sharp
slump
in
demand
every customer is valuable and now it is extremely important for business
how affairs are conducted with the remained customers and if the employees are motivated for that
.
Moreover, this difficult time requires new creative approaches to current ta
sks
. Innovation in decisions and actions must become the main point of each employee’s work not just for any independent creative division or top
-
management
.
At
the
same
time
the
task
of
employees
’ engagement
increase
is
complicated
by
the
fact
that
at
the
present
moment
the climate developing in many companies
, if to put it mildly is not the best after the wave of dismissals and the general information environment does not encourage optimism
.
Employees, left in the company, being under the pressure of the crisis, are not sure in their tomorrow position
.
If
we
speak
about
adjustment
of
the
management
model
as
about
strategic opportunity to go out of the crisis for an individual company then it is necessary to formulate a range of requirements which such innovation management model has to satisfy
: 1. Innovation management model must influence individual behavior of the employees in order to make it more efficient
. Innovation culture will make sense only in case it is implemented i
n everyday work of the employees, encouraging business results improvement
. 2. Personnel
’
s
engagement
in
management
decisions
making
and
creativity
must
become
the
basis
for
the
company
’
s
innovation
culture
development
. So
that
values
“
penetrate
” the
company
’
s
organization culture some organization novelties in the management model are necessary
. Management
must
work
on
creation
and
maintaining
of
the
mechanism of innovation culture values formation
. 3. Necessary
changes
in
management
should
affect
the
whole
company
, including
top
-
management
. Moreover, the top
-
management itself must be an initiator for these changers and their leader
.
If
the
idea
of
the
management
model
change is not supported by personal commitment of top
-
managers and the first per
son then it is doomed to die from the very start
.
The
Leader
(
and
top
-
management
) must be the main keepers and encouragers of the innovation culture values
. How employees’ engagement into the company’s life and creativity may influence the business results in general
? People
, interested
in
their
business
, in
case
hospitable
supporting
environment
is
developed
for
them
, are
ready
to
work
not
“
from
here
to
there
” but
to
realize themselves in the work, undertaking more liability, actively using new knowledge, making experiments and learning “in process”
. All this energy, skillfully directed by the management into necessary channel, is bale to create much
—
the work is performed with better quality and it takes less time to accomplish
. In
this
case
the
main
task
of
innovation
culture
building
-
up
comes down to defining and adjusting of the following organization mechanisms
: development of
employees’ engagement
development of hospitable and supporting environment
development of focus on the required results
Implementation of these organization mechanisms, as a rule, is carried out with the following measures
: Openness of information and easy exchange with it
Best practices sharing
Unnecessary bureaucracy reduction
Procedures simplification
Planar management structure
Autonomy and decentralization
Cutting time for decision
-
making
Risk encouragement Development
of
small
inter
-
functional teams
Internal networks of interaction
Mentorship in relation
to novices
Feedback
–
assessment of the leader’s style and competences
Selection of personnel appropriate by their values
Payment
, based
on
contribution
into
the
general result
Connection of innovation culture values with business results is reflected in Figure 1.
Improvement
of business results
Values of People use more knowledge
People undertake more liability
innovation
People
culture
experiment
are implemented in
and learn
everyday
work of
employees
-
Openness
of
-
Unnecessary
-
Autonomy and
-
Development
-
Mentorship
-
Selection of
information
bureaucracy
decentrali
-
of small and
in relation
personnel
,
and
easy
reduction
zation
inter
-
functional
to novices
appropriate
exchange
-
Procedures
-
Cutting
by their
Management
с
creates with
it
simplification
time for
teams
-
Feedback
values
-
Best
-
Planar
decision
-
Internal assessment of
-
Payment
,
practices
management
making
networks of the leader’s based on
sharing
structure
-
Risk
interactions
style and
contribution to encourage
ment
competences
general result
Key values and principles of work
:
-
faith in creative potential of people interested in business
-
faith
in
virtue of trust between people
-
faith
in
achievement
of
better
results
by
cooperation
Figure
1. Connection of Innovation Culture and Business Results and
maintain
mechanism of
innovation culture
values formation
Leader is
the
main
keeper and encourager of
innovation culture values
Let’s consider in more details what management can face in transformation of organization culture
. Any
change
in
management
models
can
result in the fact that with inadequate attention to “the human factor” new initiatives of the management will stall in the best case or get concealed or evident counteraction –
in the worse
. New
culture
to
be
developed
often
comes
into
contradiction
with
the
existing
collective
ideas about, for example
: ”what kind of business we do here”
,
”
what is important for us in relations between each other, with management and with partners”
,
”
what can motivate us for achievement of better results”
As
it
is
said
in
such
cases
, “
reappraisal of values” is necessary as without it any administrative and managerial reforms will not get their support in the company’s culture, and as a result, support among
the
personnel
. By
the
way
, it
can
be
often
observed
that
the
top
-
management
in
words
standing
for
“
united
close
-
knit
team
”, de
facto
, is
insensibly
separated from the rest of the team
: “we can understand everything perfectly, that is our employees who need to be changed”
. And
then
, when
the
time
comes
to
make
changes
in
the
company
’
s
culture
they
study
methodology of such changes
among the employees in considerable details and preoccupation
. However
, as
we
have
already
mentioned
, if
top
-
management
does
not
take personal sincerely concerned participation in changes, such changes are doomed to die not even started
. In
order
changes
in
the
management
model
will
work
and
become
stable
it
is
necessary
to
pay
attention
to
development
of
“
nutrient solution”
for them or new organization culture which we will call innovation culture
, as its role involves support of a new innovation management model
. Diversity
of
culture
representations
in
organization
creates
its
many
definitions
. Every
person
may
define
culture
of
the
organization
as
he
understands
it
and
it
resembles
the
story
when
four
blind people started describing the elephant
. Perhaps the most complete definition of organization culture was given by the founder of the scientific field “organization psychology” Edgar Schein
. “Organization culture –
is the system of collective basic ideas, acquired by the group, solving problems of adaptation to the external environment and internal integration which prove their efficiency and thus they are considered as a value and transmitted
to new members of the group as the regular system of perception, thinking and feeling in respect of the mentioned problems”.
Organization psychology has shown that the person, being a social creature, when appear in a group, voluntarily tries to correlate his actions with copartners
.
A
desire
to
be
“
an
honorable
member
of
the
team
”
is
inherited
desire
of
the
majority
of
people
.
And
if
in
course
of
time
the
team
develops
precise
rules
of
conduct
, based
on
common
collective
ideas
what is good and what is bad then people usually try to adjust their actions to this type of behavior, which
is considered “correct” in this particular group
. This
knowledge
is
the
basis
for
the
provision
that
managing
collective
ideas
in
the
group
it
is
possible
to
manage
individual
behavior
of
a
member
. Only
it
is
done
not
directly
, in
the
form
of
an
order
to
each
member
of
the
group
what
he
is
to
do
but
by
purposeful
influence
on
collective
ideas
until
at
some
time
it
appears
that
previous
behavior
of
people
fails
to
satisfy the renewed group images about themselves and about the way the business must be conducted and they start to change their behavior for more efficient themselves
. The
only
condition
to
be
observed
—
people want to belong to this group further
. Positive
collective
ideas
strengthen
people
’
s
solidarity
, helping
to
develop
from
heterogeneous “I” more or less homogeneous “we” (integration function)
. These
positive
collective
ideas
may
also
correct
the
behavior
of
individual
“
I
” in
order
to
conform to the ideas of “we” (correction function)
. Example
: an
experienced
and
approving
himself
manager
was
transferred to another region to raise sales
. Having
got
to
the
place
and
acquainted
with
figures
and
climate
in
the
group
, a
new
head
gathered
the affiliate’s management and showed that it was necessary to break the vicious circle
:
current
low sales results reduce
d
employees’ self
-
assessment, everybody was in decadent mood and this resulted in
the absence of initiative and interest in work, dismissals of the best
employees
and
consequently
, slumping
sales
, bonuses
reduction
that
in
its
turn
caused fall in duty performance and so on in a circle
.
Collective
ideas
, ruling
at
that
time
might
be
described
as
: “
we
are
losers
”
.
A
new
head
together
with
some
of
the
local
managers
who
worried
about
the
business
undertook
monumental
efforts
to
restore
confidence
of
the
buyers
by
improving
service
organization
,
sales went up, and senior management came from the head office to encourage local initiatives
. And gradually among the affiliate’s team the idea began to establish: “we are also able to do it!” it was necessary to get rid of lazybones and great talkers but the rest of the team had a great desire to work
.
A
new
head
, having
broken
general
decadent
mood
, managed
by
his
personal
example
to
show
and
integrate
to
his
subordinates new ideas abo
ut their team as successful one
whi
ch, in their turn, began to corr
ect the behavior of individual employees for more efficient
. The
system
of
collective
ideas
may
be
transferred
as
by
informal
channels
—
from
the
employee
to
the
novice
, for
example
, in
stories
about
“
how
its
is
acceptable to work here” as by formal ones
—
via general meetings, meetings with authorities, instructions, internal regulations, codes of behavior and provisions on corporate culture, company clothes, emblems and badges and etc. But the core of organization culture which may be used as the compan
y management tool is corporate system of values. Everything
that
a
person
or
a
group
of
people
is
considered
significant is called values.
For
example
, in
one
company
there
was
an
opinion
(
or
basic
idea
)
spread among the employees: “nothing must be touched until it is broken”
.
Conducting
culture
diagnostics
it
was
obvious
to
find
out
that
such
values
as
“
caution
” and
“
traditions
”
come on top among the others
. If
such
diagnostics
had
been
carried
at
the
nuclear
facility
then
, perhaps
, such
values
would have appeared
to be positive and helpful for the enterprise but as the diagnostics was carried out at the enterprise manufacturing goods for commercial marketing then the management got the first warning be
ll about the state of organization culture as right at that moment they were thinking about implementation of innovation technology
.
At
that
time
the
management
was
able
to
react
in
time
and
in
some
period
the program, oriented to popularization of new values such as “openness to something new” and “opportunity to show yourself” was launched mostly among the active young personnel
. Conducting
inter
-
corporate
communications
it
is
important
to
consider
not
only
something
that
has
to
be
said
to
the
company
’
s
employee
for
him
to
remember but also regularly carry out monitoring of organization culture state in the company to have opportunity to execute necessary managerial corrections as “if you don’t measure t
hen you won’t be able to manage”
. In
such
case
it
is
possible
to
speak
about
introduction
of
the culture management system in terms of values in the company
. If
to
represent
the
organization
as
a
fruit
-
bearing tree
(
Figure
2), then fruits in such case will be an integral work result of the whole company
. Indeed, exactly like a tree the organization uses environmental resources, so that processing them to give into the same environment some finished products (fruit)
.
The more efficiently processing of external resources goes, the more
finished production it is
.
If to work hard then the harvest is rich, if something goes wrong then there are few fruit or no fruit at all
.
So
that
business
results
at
the
end
of
the
reporting
period
do
not
come
as
a
surprise
the
companies develop their competencies, approve plans, targets and develop strategies, as well as a lot more that is meant to motivate,
order and concentrate activity of the employees
.
Both
business
results
and
strategies
of
their
achievement
are
frequently
in
sight
but
something
that
serves
as
a
basis
for
them
, corporate
values
and
basic
ideas
, being
the
central
elements
of
organization
culture
, all
this
is
concealed
from
the
manager
’
s
attention
. The
same
way
as
the
condition
of
the
tree
’
s
root
system
determines
its
general
vitality and fruitfulness the state of organization culture determines the quantity and quality of business results
. Figure
2. Organization as a Fruit
-
Bearing Tree
Culture
in
the
companies
is
either
not
managed
at
all
or
it
is
done
on “the leftover principle” or when the company is “pushed to the wall” and the problems have already started or a favorable occasion comes –
a corporate party
. Achievement of innovation results in such case is costly and inefficient affair as a lot of mo
ney, forces and time are spend for unproductive actions
. It
should
be
noted
that
the
Russian
companies
long
ago
acquired
the tendency to present lists of corporate values for public observation
.
As a rule, it is done in corporate reports and advertising materials, as well as on corporate web
-
sites
.
Lists
of
corporate
values
may
be
seen
hanging
on
the
walls
in reception areas, offices, they are deciphered in details for the employees in internal b
rochures as well as during corporate events
. Innovation
culture
, which
is
to
increase
engagement
of
the
personnel
into
the
process
of
decision
-
making
, is
built
on
the
belief of each employee of the company, including top
-
management and minor executives
that we are here “all in one boat”
.
If
we
want
our
employees
to
“
root
for
business
” and
come
to
us
with
their
ideas
, let
’
s
put
ourselves at their place in order to understand what you would like to get from your boss in this case. It
can
be
rather
difficult
to
imagine
and
it is even more difficult to start acting as if “we are all in one boat” but it is unlikely to change anything without this
. So
, to
begin
with
, in
order
the
employee
comes
to
the
boss
and
brings
an
idea
how
to
improve
work
he
must
be
sure
, without
any
doubts
, that
he
will
be talked with, listened to his ideas
,
thanked, his idea will be considered and should his proposal be sensible, he will be encouraged materially, but in any case, his initiative will be surely evaluated
.
Business results
Strategies and purposes
Values and collective ideas
From a perspective of culture management in terms of values, the statement “we are all in one boat here” means that the employees of the given company have strong well
-
consolidated culture with common values which are shared by the ma
jority.
Actually, the values which the companies management suggest to their employees and customers very often have little in common with the values existing in the teams in reality
. According
to
the
results
of
many
diagnostics
of
organization
culture
which
were
conducted by us, it may safely be said about a great difference between so
-
called “declared” values and the actually existing ones
. Basically
, such
detected
difference
is
able
to
show
the
manager
the
level
of
delusion concerning his idea about actual state of affairs in the company
. The
company
’
s
management
has
unconditional opportunity to use creative potential of their employees fully and it is performed by coordinating values of the whole organization
, see Figure
3. Figure
3. Cultures of successful companies involve both values of their leaders and collective values of the employees
It
is
high
time
to
admit
the
fact
, proved
by
the
statistics
of
corporate
transformations
: the
values
, given
“
from
above
” do
not
take hold in the collective groups
.
Moreover
, there
are
cases
when
corporate
transformations
were
accompanied
with
wrecking
acts
on the part of production workers and the management was not psychologically ready for that
.
Culture
as
a
tree
grows
from
the
bottom
upwards
. This
means
that
organization
values
are
necessary
to
be
“
cultivated
”, selective
work
is
to
be
done
, something
unwanted
must
be
removed
and
something
necessary
for
growth
must
be
cherished
and
planted
,
but this must be done very carefully, understanding in each particular case:
what needs to be done for new values not to be rejected. An
experienced
manager
, dealing
with
culture
as
a
plant
breeder
understands that a new organism will not be old but it w
ill carry features of the old one and new
.
For many successful top
-
managers the activity on culture transformation is a personal challenge
. There comes a time when it is possible to achieve new successes only overstepping personal “I”
. Not everyone manages to do it at once but some of them finally manage and this period of life is long
-
remembered
. It
is
both
drive
from
a
difficult
managerial
task
and
time of personal growth
. (
С
) Yevgeny Sinyakov
. 2009 www.triuna.ru
Values of management
Values of employees
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