!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd"> Streamline Training & Documentation: Building Innovation Capacity

Wednesday, October 17, 2007

Building Innovation Capacity

In the Fall 2007 issue of the MIT Sloan Management Review, David Wagner provides a summary of work of Joaquin Alegre and Ricardo Chiva that provides insight into how an organization can increase its capacity to innovate.

Alegre, an associate professor of management at the University of Valencia in Spain, and Chiva, an associate professor of management at Jaume I University in Castellón, reviewed the secondary literature to identify characteristics that were plausibly important in strengthening an organization's innovation capacity. They then collected survey data for the European Union's ceramic tile industry that indicated that five of the characteristics were key factors underlying organizational learning capability (OLC), which, they argue, drives capacity to innovate.

These five key factors for organizational learning and innovation capacity are:

Experimentaton — receptivity of the organization to new ideas and suggestions. In a high-learning organization, employees are encouraged to search for innovative solutions to problems. The organization benefits from enhanced creativity — "a flow of ideas and proposals that challenge the established order."

Risk taking — tolerance for ambiguity, uncertainty and errors. To be active and effective in innovation, the organization must be prepared to learn not only from successes but also from failures. Typically, this is the factor that presents the organization with the greatest room for improvement.

Interaction with the external environment — "scope of relationships with factors that are beyond the direct control or influence of the organization" — competitors, and the economic, social, monetary, and political/legal systems. To innovate at a high rate, the organization must be able to learn at a pace that enables it to evolve in sync with its environment.

Dialogue — "sustained collective inquiry into the processes, assumptions and certainties that make up everyday experience." Dialogue is the way in which information and skills are most readily spread through the organization. It is also the way in which multiple viewpoints get an airing so they can be considered and evaluated. Among the five key factors, dialogue is the one in which organizations are typically strongest. Unsurprisingly, low-learning organizations have more room for improving internal dialogue than high-learning organizations.

Participative decision making — involvement and influence of employees in the decision-making process. Participative decision-making — the factor on which low-learning organizations rate themselves lowest — tends to boost employee involvement and job satisfaction, i.e., it has important motivational impact.

Alegre and Chiva's recommendation is that an organization looking to increase its capacity to innovate, assess its learning capability by measuring the five factors listed above. The organization then knows what strengths it can build on and where it has weaknesses it needs to address.

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