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With innovation it often seems that the harder one tries to grasp it the more it slips through the fingers. Since many of the attributes of innovation seems ethereal, we have focused more on how to nurture innovation and less on what the mystery that seems to surround it really is and how it is created. Although we may not know precisely how to create an innovative enterprise, there are several clues about the motivation that drives innovation and the types of skills most likely to produce it.54 As discussed earlier, tacit knowledge is the type of knowledge most likely to produce innovation. Rudimentary skills based on tacit knowledge may be acquired through incentive systems that employ traditional Skinnerian rewards or punishments. However, social science research has repeatedly shown that anything requiring the use of cognitive skills (and certainly innovation requires the use of cognitive skills) cannot be accomplished using Skinnerian incentives whether negative or positive.55 In other words, incentives (i.e., rewards) and disincentives (i.e., punishment) are not only ineffective in nurturing innovation, they are also often counterproductive. Systems that allow maximum autonomy or choice, that provide opportunities for learning and mastery, and that instill a sense of meaningful purpose are more effective in tapping the powerful intrinsic motivation that drives in-novation.56 Organizations that can develop such systems are more likely to be successful in creating and developing skills and capabilities based on tacit knowledge than those that do not. It is no coincidence that the same environments and processes that encourage the development of tacit knowledge also encourage innovation and creativity. A person or group of people free to experiment, given opportunities to learn and practice, and instilled with a sense of purpose, is more likely to produce innovative results and get intrinsic satisfaction in doing so than someone in a more constrained environment who is denied training, and is robbed of the satisfaction that should be associated with work well done.57

Having identified key success factors for developing a culture of innovation, a logical question is, "How do we start?" As in all strategic planning processes, situational analysis provides a starting point and helps to identify the data necessary to conduct a gap analysis. One tool to accomplish this that fits with the concept of innovation is the creativity audit.58 The audit contains eight steps that reflect an organization's history and culture with respect to creative endeavors, and provides a tool that an organization can use to catalog its innovative identity.

The Creativity Audit?9

1. Bare Facts

a. What is the asset value of your creative capabilities (special equipment, people, architecture)?

b. What proportion of your revenue comes from products less than one year old? Less than five years old?

c. Assess your creative productivity. What percentage of the last few years' creativity initiatives have turned into actual product? Into actual improvements in business processes? Into useful changes or reinforcements of the company culture?

d. Inventory, if possible, a half a dozen diverse creative initiatives your company, your division, or your team—whichever is appropriate—has taken recently.

2. Credit Due

a. Who brought those initiatives to public awareness or discussion: an "insider" or "outsider"?

b. Who seconded them?

c. Who carried those initiatives to the next step, the next level, etc., all the way to realization?

d. What conversations were key to this process?

3. Occasion: Under what circumstances did those initiatives arise?

a. Did they arise out of nowhere?

b. Were they in response to specific challenges? If so, whose?

c. Were they in response to benchmarking the competition?

d. Did they arise in response to an emergency, necessity, or other unforeseen event?

e. Where they the result of a well-considered corporate design to encourage or import such initiatives?

4. Design: If you believe that a company-wide creativity system stimulated a particular initiative, can you isolate the elements of the system that played a role?

a. Search and employ elements (recruitment, mergers, acquisitions, consultants, etc.)?

b. Architectural elements (special work spaces, social spaces,


c. Cultural elements specifically descriptive and supportive of creativity?

d. Pedagogical elements (on-site training, sabbaticals, mind-clearing exercises, etc.)?

e. Carrots and sticks (bonuses, peer pressure, status, rewards, etc.)?

f. Technological elements (information networks, communications systems, gene-splicing tools, etc.)?

g. Leadership elements (interventions by the CEO et al.)?

h. Financial elements (investment in idea generation capabilities, slack money)?

5. Tracking

a. Map the progress of a sample of creative initiatives from the idea to unofficial project to official project, thence to active source of company value.

b. Pay particular attention to the systemic barriers, checkpoints, obstacles, friction points, and so on, noting whether the course of action is appropriately flexible, or dysfunctionally sclerotic.

c. Be alert, also, to human factors (3 jealousy and enthusiasm, alertness and ignorance, leadership support, etc.) that may stall or smooth the progress of the initiative.

6. Benchmarking

a. How much do you know about the procedures and cultures of your competitors? Of notably creative corporations?

b. How much do you know about the most creative company in your industry?

c. How do you foster company-wide awareness of new developments in your industry? Trade shows? Newsletters? Conferences? Customers? Creator networks?

d. Have you, in your investigations and research into the activities of the competition, found clues to your own sources of future competitiveness?

e. What hard-to-copy capabilities do you have in place that allow your company to create distinctively, continuously, and effectively?

7. People

a. Do you know who the top creative talents in your business are, and what motivates them?

b. What is your track record in finding, attracting, developing, and retaining talent?

c. Specifically, how many key creative talents did you lose in the past 12 months and what are you doing to replace them?

d. Who's in charge of recruitment? Is it just human resources?

e. Do your reinventing processes lead to a desired level of diversity and divergence of opinions, and inclusion of new voices?

f. What, if anything, is lacking in your recruitment processes, and how and when do you plan to rectify those problems?

8. Creative Capital

a. What systems are in place for taking stock of your creative capacities and performance?

b. What systems are in place for generating creative ideas?

c. What systems are in place to stockpile and protect such ideas?

d. What systems are in place to realize such ideas?

e. What systems are in place to reward such ideas?

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