Either Downsizing, Implementation Of A New Technology, Or A Merger Or Acquisition
In a minimum of four (4) pages in 7th edition APA formatted paper:
- What were the key frontline experiences listed in relation to your chosen change?
- How do they relate to those listed in Chapter 4 (Goodman & Dingli, 2017 ?
- Did you identify new ones confronting change managers?
- How would you prioritize these experiences?
- Do any stand out as “deal breakers”? Why?
- What new insights into implementing this type of change emerge from this?
(250 words for DQ)
Prior to reading this DQ, please read the above assignment and understand what the assignment is asking you to complete. Once you have an understanding of the assignment, please continue to the paragraph below to complete DQ1.
Your discussion should summarize the articles in such a way that it can justify any arguments you may present in your assignment and should be different from the abstract. In addition to your researched peer-reviewed article, you must include an example of the article researched as it is applied by industry (company, business entity, and so forth).
Do these in order:
- In correct APA format, write the Reference of the article.
- Clearly state what the article is about and its purpose.
- Describe how you will use it in your upcoming assignment.
- Repeat for a total of eight (8) peer-reviewed sources.
Creativity and Strategic Innovation Management
Creativity and Strategic Innovation Management was the first book to integrate innovation management with both change management and creativity to form an innovative guide to survival in rapidly changing market conditions. Treating creativity as the process, and inno- vation the result, Goodman and Dingli emphasise the importance of a strategic approach to management through fostering creative processes.
Revised and updated for a second edition, this ground-breaking book now includes:
• A new section on contemporary themes in innovation management, such as the use of social media and sustainability.
• More coverage of entrepreneurship, ethics, diversity issues and the legal aspects of tech- nology and innovation management.
• More international cases and real-life examples.
The book is also supported by a range of new tutor support materials. This textbook is an ideal accompaniment to postgraduate courses on innovation manage-
ment and creativity management. The focused approach by Goodman and Dingli also makes it useful as supplementary reading on a range of courses from management of technology to strategic management.
Malcolm Goodman is Senior Teaching Fellow at Durham University, UK.
Sandra M. Dingli is Associate Professor at The Edward de Bono Institute for the Design & Development of Thinking at the University of Malta, Malta.
Creativity and Strategic Innovation Management Directions for Future Value in Changing Times
Malcolm Goodman and Sandra M. Dingli
Second edition published 2017 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge 711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2017 Malcolm Goodman and Sandra M. Dingli
The right of Malcolm Goodman and Sandra M. Dingli to be identified as author of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.
First edition published by Routledge 2013
British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library
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List of figures xx List of tables xxii Preface xxiv Acknowledgements xxvi
PART I The challenge of changing times 1
1 The changing business environment 3
Learning objectives 3 Introduction 3 Context 4
What is change? 4 Understanding the causes of change 6
Socio-cultural forces 6 Economic forces 8 Technological trends 9 Environmental trends 10
Cause, effect and apprehension 11 Complexity and change 11
Key principles 11 Creating wealth 11 Factors of production 12 Creativity 13
What is creativity? 13 Consequences of the business paradigm shift 13 Types of change 14
Incremental change 14 Transitional change 14 Transformational change 15
Change drivers 15 Practice 16
Business paradigms 16 Marketing and management myopia 16 Least-cost production paradigm 16 Marketing paradigm 17 Customer-perceived value paradigm 17 Service dominant logic paradigm 18 Post-capitalist paradigm 18
Action 18 Backwards or forward into the future? 18 The challenge of change 18
Challenges of initiating change 19 Challenges of sustaining momentum 19 Challenges of system wide rethinking 19 Challenge to traditional management 19
Summary 20 Discussion questions 20 Case exercise 20
Nokia I: early success in the mobile phone industry 20 References 21 Selected YouTubes 23
2 Key business decisions 24
Learning objectives 24 Introduction 24 Context 25
Time frame decisions 25 Information overload 27 Shareholder, finance and government pressure 27 Shortening business life cycles 27
Feel or process? 28 Key principles 28
Business decision process 28 Rational model 30 Real world complications 31 Contingency approach 31 Concepts of efficiency and effectiveness 33 The S-curve 33 Three strategic approaches 34
Limpet strategy 34 Cautious strategy 34 Innovative strategy 35
Practice 35 Two key questions 35
Concept of customer-perceived value revisited 36 Managing bias 36
Action 37 Making decisions: blending knowledge with experience to achieve
know-how 37 Linking creativity, entrepreneurship and innovation 37 Summary 38 Discussion questions 38 Case exercise 38
Tyrell’s: when the chips are down raise a glass! 38 References 39 Selected YouTubes 41
3 Management revisited 42
Learning objectives 42 Introduction 42 Horse sense! 43 Context 43
Global business environment 43 Key principles 44
A divertimento 44 Defining management 45
Primary management processes 47 Redefining management action: control or lead? 48
Putting the emphasis on control: micromanagement/Theory X 48 Putting the emphasis on leadership: fundamental management
competencies 48 Management: quo vadis? 50
Practice 51 Essential management skills 51 Managing self and individuals 52 Managing groups 52 Managing an organisation 52
Ethical considerations 53 Broad management styles 53 Organisational development 54
Is there a correct style? 54 Japanese management approach 55
Japanese management culture 55 Japanese management techniques 55
Theory Z 55 Quality of Work Life (QWL): issues and strategies 57 Quality circles 57
Action 58 New skills for a new world 58
Summary 59 Discussion questions 59 Case exercise 59
SASOL: encouraging individual initiative and freedom 59 References 60 Selected YouTubes 61
PART II Innovation from theory to practice 63
4 Business creativity 65
Learning objectives 65 Introduction 65
Nasruddin 66 Context 67
What is creativity? 67 Definitions 67 Process 68
Generate ideas 68 Creative people 68 Strive for originality 68 Provide examples of their work 69
Key principles 70 Understanding thinking 70 Physiology of the brain 71
The working brain: a synaptic wonder 72 Practice 72
Contextual factors affecting personal creativity 72 Organisations and creativity 73 Expressing natural skills 73
Action 73 Assessing personal creative potential 73 Personal Creativity Audit 74 Personal creativity in action 74 Work environment and performance 75 Left-brain and right-brain thinking model 76
Learning skills 78 Introducing the total thinking model 78 Perception 79 Half-brained thinkers! 79
Creative thinking applications 80 Summary 80 Discussion questions 81 Exercises 81
Sexism 81 Beijing Express problem 81
References 82 Selected YouTubes 82 Appendix 4.1: Personal Creativity Audit (PCA) 83 Appendix 4.2: assessing PCA performance 84 Appendix 4.3: sexism 85 Appendix 4.4: Beijing Express problem solution 85 Appendix 4.5: priming illusion solution 85
5 Applied business creativity 86
Learning objectives 86 Introduction 86 Context 86
Challenge of change 86 Stimulating creative thinking 87 Creativity and intelligence 87
Key principles 88 The quick-fix approach 88 The creative problem-solving approach 88
Note-taking skills 88 Memory friendly information 89 Learning skills 89 Picture perspectives 90
Getting to grips with creative individual problem solving 90 Demonstration exercise: organising a perfect wedding 90
Practice 94 Building an introductory CPS toolkit 94
Action 95 CPS facilitation 95
Individual or personal CPS activity 95 Group CPS activity 95 Organisational CPS activity 95
Summary 95 Discussion questions 95 Case exercise 96
Toymaker I: from lone apprentice to master craftsperson 96 References 98 Selected YouTubes 99 Appendix 5.1: CPS toolbox notes 99
6 Business innovation 108
Learning objectives 108 Introduction 108 Context 108
Why innovate? 108
What is innovation? 110 Strategic innovation management 111
Key principles 111 Commitment 111
Getting started 111 Innovation champions 112 Levels of innovation 113
Incremental innovation 113 Radical innovation 113 Architectural innovation 114 Technological innovation 114
Sources of ideas 115 Closed sources 115 Open sources 116
The innovation process 117 Phase 1: initial spark of creative activity 117 Phase 2: idea evaluation 117 Phase 3: invention 117 Phase 4: external and internal launch 118
Idea selection 118 Idea Funnel 118 Stage–Gate model 119 Intellectual capital 119
Knowledge and technology transfer 120 Practice 120
Harnessing systems thinking 120 Hard systems approach 120 Soft systems approach 121
Action 121 Private sector 121
Innovation in MNCs 121 Innovation in SMEs 122
Public sector 122 Innovation in NGOs 122 Innovation in charities 123 Innovation in state-funded organisations 123
Innovation bottlenecks 124 Lack of ‘time to think’ 124 Bureaucracy 125 Structure 125 Poor lateral communication 125 External talent 126 Financial constraints 126 Limiting paradigms 126 Inappropriate mental models 126 Limitations of traditional teaching and training 126
Discussion questions 127 Case exercise 127
Nokia II: out of the ashes of disaster grow the roses of success 127 References 129 Selected YouTubes 130
7 Organisational culture and climate 131
Learning objectives 131 Introduction 131 Context 131
Need for group (collective) creativity 131 Key principles 132
Management commitment 132 Managers and creativity 132 Management styles 133 Manager’s interests 133
Group behaviour 133 Group participation 133 Loyalty and group participation 135
Working in groups 136 Establishing group beliefs 136 Empowering groups to perform 136 Encouraging group members to interact 136 Attempting to understand interactions 137
Preparing for group activity 137 Leadership role 137 Group rewards 137 Group selection and initial briefing 137
Managing groups 138 Advantages 138 Disadvantages 138 Solo or team run? 139
Belbin’s Team Roles 139 Tuckman model 140 The MBTI inventory/Jung’s personality typologies 141 The KAI inventory 142
Practice 143 Empowering people 143
First task of a CPS facilitator 143 Second task of a CPS facilitator 144 Third task of a CPS facilitator 144
Process role of a CPS facilitator 144 Key process skills 144
Conflict in groups and teams 145 Action 145
Organisational culture and climate 145 Organisational attitude and commitment 146 Organisational philosophy 146 Organisational climate 146
Key factors for developing a climate that fosters innovation 148 Sustaining an organisational climate 150 Can climate and culture be assessed? 151 Ekvall’s Creative Climate Questionnaire 152 Isaksen’s Situational Outlook Questionnaire 152 Great Place to Work Institute 153 Workplace democracy 153
Summary 153 Discussion questions 154 Case exercise 154
Samsung: seeking a creative corporate culture 154 References 155 Selected YouTubes 156 Appendix 7.1: management traits assessment 157 Appendix 7.2: group CPS audit 157 Appendix 7.3: assessing group performance 158
8 Overcoming resistance: mindsets and paradigms 159
Learning objectives 159 Introduction 159 Context 159
The power of mindsets and paradigms 159 Key principles 162
Group mindsets 162 Organisational mindsets 162 Challenging mindsets 163 Psychological factor sets 163
Perception 163 Learning 164 Beliefs and attitudes 165
Creativity blockers 165 Perceptual blockages 166 Emotional blockages 167 Process skill blockages 167 Communication blockages 167 Environmental blockages 168 Cultural blockages 168
Practice 168 Obstacles to individual business creativity 168
Tiredness 168 Anxiety 169 Negativity 169
Fear of failure 169 Fear of standing out from the crowd 169 Fear of challenging the rules 169 Fear of emotional things 169 Myopia 170
Obstacles to group business creativity 170 Common problems that challenge the effectiveness of hard
systems thinking 171 Diagnosis 171 Belief in measurement 171 Risk spots 171 Faith in management techniques 171
Action 172 Working with others 172 Viewing management problems 172 Fixed vs. growth mindsets 173 Nudges and wise interventions 174
Summary 174 Discussion questions 175 Case exercise 175
Rose Tree Garden Centre: growing confidence in creativity 175 References 176 Selected YouTubes 177
PART III Linking creativity to strategic innovation 179
9 Applied business innovation 181
Learning objectives 181 Introduction 181 Context 182
Innovation idea sources 182 Key principles 183
Closed innovation 183 Open innovation 183 Open-source software (OSS) 185
Advantages of OSS 185 The impact of OSS 185
Practice 187 Closed innovation idea sources 187
Idea management systems 187 On-site creativity centres 189
Open innovation idea sources 189 Capturing ideas 190
External R&D agencies 190 Idea scouts and idea connectors 190
Key personnel, technology transfer 190 Contractual arrangements 191
Developing ideas 192 Co-creation 192 Crowdsourcing 192 Social networking 195
Risk factors 195 Unpredictability vs. certain success 195
Action 196 Innovation networks 196 Innovation and entrepreneurship 197
Summary 198 Discussion questions 198 Case exercise 199
Toyota: an elegant search for innovative ideas 199 References 200 Selected YouTubes 201
10 Building a strategic managing innovation model 203
Learning objectives 203 Introduction 203 Context 205
Step 1: checking the now before thinking about the how 205 Rethinking time 206 Rethinking space 206 Rethinking mass 207
Linking the Einstein metaphor with strategic innovation 207 Step 2: conventional approach to strategic innovation 207
Content 208 Process 208 Tools 208
Step 3: basic processes of strategic innovation 208 Four key stages 208
Key principles 209 Step 4: innovation action plan 209
Practice 210 Step 5: reviewing the business 210
Challenging mindsets and paradigms 210 Step 6: reviewing the market 211
Deciding which customers to target 211 Challenging mindsets and paradigms 211
Step 7: reviewing the market offering 211 Challenging mindsets and paradigms 211
Step 8: creating customer-perceived value 212 Buyer experience cycle 212 The customer-perceived value matrix 213
Step 9: characteristics of strategically innovative organisations 214 Culture 214 Structure 214 Processes 215 Systems 215 People 215
Action 216 Step 10: purpose of strategic innovation 216 Step 11: transformation through strategic innovation 216 Step 12: holistic approach to strategic innovation management 217 Step 13: key issues of intent 218
Create purpose 218 Make innovation happen 218 Sustain model development 219
Final thoughts 219 Summary 219 Questions for discussion 220 Case exercise 220
Yamaha Motor Company: ‘Revs your Heart’ 220 References 222 Selected YouTubes 222
PART IV Strategic innovation in changing times 225
11 The importance of leadership 227
Learning objectives 227 Introduction 227 Context 229
Avoiding contextual myopia 229 Key principles 229
Leadership competencies 229 The difference between management and leadership 230
Qualities of a manager 230 Qualities of a leader 231 Comparison between managers and leaders 231
Leadership theories I: trait theories 232 Leadership theories II: behavioural theories 232 Leadership theories III: contingency theories 233 Leadership theories IV: emerging theories 234
Charismatic leaders 234 Leadership characteristics 235
Visionary leaders 235 Transactional leaders 235
Contemporary leadership thinking 235 Courageous leadership 235 Leadership and management: are they mutually exclusive? 236
Practice 236 Assessing individual leadership skills audit 236 Assessing individual leadership skills audit interpretation 236
Action 238 Seizing the initiative 238 Leadership challenges 238 Leadership and innovation 238 The changing role of leadership 239
Summary 240 Discussion questions 241 Case exercise 241
African leaders: perspectives on leadership 241 References 243 Selected YouTubes 244 Appendix 11.1: assessing individual leadership skills
audit interpretation 245
12 Business social responsibility 246
Learning objectives 246 Introduction 246 Context 246
Business socialisation 246 Revival 246 Leading issues 248
Key principles 249 Definition of business social responsibility 249 Business ethics 249
Value of high ethical standards 249 Corporate social responsibility 250
Carroll’s pyramid 250 Generating and sharing social value 251
Well-being 251 Practice 252
Exploring the bottom line 252 People issues 253 Planet issues 254
Environmental responsibility 254 Resource sustainability 255 Circular economy 255
Profit issues 255 Executive pay 255 Rank and file pay 256 Business profiteering 256 Effects of MNC profit strategies on SMEs 256
Action 257 Business solidarity: implementing CSR 257
Community 257 Workplace 257 Market place 258 Environment 258
Global recognition of BSR 259 Organisational approaches to CSR 260
Global or local? 260 A matter of attitude 260
Summary 261 Discussion questions 261 Case exercise 261
Molinos Rio de la Plata: championing BSR 261 References 263 Selected YouTubes 263
13 Organisational renewal for strategic innovation 265
Learning objectives 265 Introduction 265 Context 267
View from the boardroom 267 Key principles 267
Business game components 267 Benefactors 269 The risk paradox and casino market games 269 Bets, sweats and debts 269 Investment 269
Business game players 269 Multinational corporations 269 MNCs are gaining strength in Africa, Asia and South America 270 The importance of SMEs 270
Corporate game plays 271 Profit quest 271 Growth quest 271
Corporate game strategies 272 Operating paradigms 272
Three-way stretch model 272 Practice 273
Assessing organisational culture 273 Selecting an organisational style 275
Inside or outside track? 275 Theory Z revisited 276 Theory WB approach 276 Managing change to boost well-being, creativity and innovation 278
Well-being 278 A new workplace democracy model 279
Disadvantages of workplace democracy 280 Action 282
Conventional planning practice 282 Reasons for pre-planning 282 Understand the people 283
Encouraging well-being 284 Understand the task 284 Understand the organisation 284 Develop plans 285 Pre-planning a culture change programme 285
Strategic approaches of Theory Y and Theory WB organisations 285 Importance of gaining and retaining trust 286
Summary 287 Discussion questions 287 Case exercise 288
Semco: a maverick approach to management 288 References 290 Selected YouTubes 291 Appendix 13.1: organisational creativity audit interpretation 291
14 Reflections 293
Learning objectives 293 Introduction 293 Context 293
Business trends 293 African trends 296
Instant availability 296 Responsible consumption 296 Transaction convenience 297 Gender equality 297 Improved online services 298
Asian trends 298 Network connections 298 Corporate social responsibility 299 Heritage appeal 299 Responsible business 300 The informal economy meets smartphone culture 301
European trends 301
The euro: a means not an end in itself 301 Connecting customers 302 Targeting Millennials 302 Importance of SMEs 302 Need for product and service innovation 302 Call for strategic innovation 302
South American trends 303 Immigration and integration 303 Urbanisation 303 Marketing to the time poor 304 Co-creating customer-perceived value 304 Digital opportunities for SMEs 304
Key principles 305 Management and organisation 305
Key trends 306 Organisational culture 306
Theory WB model 306 Determinants of organisational culture 307
Leadership 307 Emergence of multiple layered leadership 307 Key trends 307
Creativity and innovation 308 Growing importance of creativity and innovation 308 Group creativity and self-management 308
The pursuit of happiness 308 Practice 309
Revisiting the practices of wealth creators 309 Economic system 309 Environment 310 Society 310
Action 311 The trumpet sounds 311
Summary 311 Discussion questions 311 Case exercise 311
Toymaker II 311 References 314
Epilogue 315 Academic index 317 Subject index 320
1.1 Explaining the changing business environment 4 1.2 Russian dolls 5 1.3 Business environment changes 7 1.4 Business cycle troughs and peaks 9 2.1 Exploring key business decisions 25 2.2 Business decision process 28 2.3 The S-curve: a comparison between an established and a new technology 33 3.1 Exploring management 43 3.2 Putting the emphasis on leadership 49 4.1 Overview of business creativity 66 4.2 Lateral view of cerebrum, cerebellum 71 4.3 Activities that entail personal creativity 74 4.4 Individual response patterns 76 4.5 What do you see at first? 80 4.6 Personal creativity assessment spectrum 84 5.1 Exploring new skills 87 5.2 Planning the perfect wedding mind map 1 92 5.3 Planning the perfect wedding mind map 2 92 5.4 Planning the perfect wedding mind map 3 93 6.1 Exploring business innovation 109 6.2 The innovation process phases 116 6.3 Idea Funnel 118 6.4 A simple Stage–Gate system 119 7.1 Seeking a suitable organisation environment 132 7.2 Manager’s interests 134 7.3 Group responses 134 7.4 Degrees of group participation 135 8.1 Overcoming mindsets and paradigms 160 8.2 Assumptions becoming mindsets 163 8.3 A matter of perception 164 8.4 Common individual CPS blockages 166 8.5 The Nine Dot test 166 9.1 Exploring innovation idea sources 182
9.2 Boudreau and Lakmani (2013) crowdsourcing classification 193 10.1 Building a strategic innovation model 204 10.2 13-step model 205 10.3 Rethinking space, time and mass 206 10.4 Traditional strategic factor set 207 10.5 Four key stages of the strategic innovation process 209 10.6 Buyer experience cycle 212 10.7 Organisational structure to support strategic innovation 215 11.1 Exploring leadership 228 12.1 Exploring business social responsibility 247 12.2 Carroll’s Pyramid 251 12.3 Bottom line issues? 252 12.4 A call to action? 257 13.1 Organisational renewal for strategic innovation management 266 13.2 The three-way stretch 273 13.3 Organisational style matrix 275 13.4 Structure of a Theory WB organisation 277 14.1 Overview of reflections 294 14.2 Circular economy 295 E.1 Creativity and innovation management toolkit 316
1.1 Key general forces affecting businesses in developed economies 6 1.2 The factors of production 12 3.1 Student seminar survey I 44 3.2 Student seminar survey II 44 3.3 Major management activities 48 3.4 Basic individual management skills 52 3.5 Summary guidelines for group managers 52 3.6 Summary guidelines for top management 53 3.7 Main management styles 54 3.8 McGregor’s assumptions leading to Theories X and Y 54 3.9 Japanese management culture 55 3.10 Comparison and contrast of Theories X, Y and Z 57 3.11 Examples of Theory Z organisations 58 4.1 Exploring logical and creative thinking 77 4.2 Cortical hemispheres 77 4.3 Personal Creativity Audit 83 4.4 Personal Creativity Audit coding 84 5.1 Illustration of some generated ideas for this exercise 91 5.2 Introductory CPS toolkit 94 5.3 Useful problem evaluation tools 100 5.4 Useful idea generation and development tools 102 5.5 Advantage/disadvantage assessment 106 6.1 Characteristics of incremental and radical innovation 114 7.1 Management styles 133 7.2 The Belbin roles 139 7.3 Jung’s personality typologies 141 7.4 Key factors in Ekvall’s Creative Climate Questionnaire 152 8.1 Individual CPS blockages 169 8.2 CPS difficulties: an empirical sounding 170 8.3 Leading CPS difficulties identified in the literature 170 9.1 Closed vs. open innovation principles 184 9.2 Closed and open innovation rationale and suitability 184 9.3 Closed innovation idea sources 188
9.4 Open innovation idea sources 190 9.5 Innovation networks 197 10.1 Matching conventional factor sets with Einstein’s variables 208 10.2 Reviewing the business 210 10.3 Deciding which customers to target 211 10.4 Reviewing the market offering 211 10.5 Customer-perceived value map matrix 213 11.1 Differences between managers and leaders 230 11.2 Leadership attributes 231 11.3 Personal qualities of leaders 232 11.4 Leadership skills status audit 237 13.1 Major business games 268 13.2 Key game activities 272 13.3 Organisational Creativity Audit 274 13.4 Theory Y and Theory WB organisations 281 13.5 Approaches of Theory Y and Theory WB organisations 286
Introduction This is the second edition of Creativity and Strategic Innovation Management. Business people and those who study business live in times of rapid and discontinuous changes in the business environment that have been triggered by a complex set of factors. Businesses that used to operate on safe ground now experience periodic and violent shifts and after- shocks in their environment. These shocks have been intermittent for some time but since the beginning of the twenty-first century have been happening at an increasing rate. The threat posed by climate change, denied by a large part of the business community for far too long, the financial crises of 2008, military conflicts, political swings, persistent wars, floods of refugees, the unexpected decision of the UK to leave the EU have combined to seriously challenge all those concerned with wealth generation and distribution. Then there is the com- petition to beat.
It is clear that it is time for businesses to seriously review the ways they have tradi- tionally operated and to start to do things differently. Einstein emphasised that ‘To raise new questions, new possibilities, to regard old problems from a new angle, requires creative imagination and marks real advance in science.’ But how? The second edition seeks to offer some help by addressing the following themes in relation to a practical typology, namely:
Key themes Framework
Management/Leadership Context Creativity/Innovation Key principles Organisational culture to support innovation Practice Business social responsibility and management of change Action
The text’s main aim is to stimulate thinking about these themes and their interaction with the Framework topics to provide guidance as to how businesses can achieve and sustain inno- vation by adopting a holistic approach to creativity and strategic innovation management. Examples in each chapter have largely been selected from the continents of Africa, Asia, Europe and South America as the literature is awash with U.S. illustrations.
In many cases the words organisation and company or corporation can be read just as business activity. Where it makes sense to distinguish between them, this should be apparent in the text.
The major themes covered apply generally to multinational corporations (MNCs), small and medium sized enterprises (SMEs), non-governmental organisations (NGOs) and chari- ties. Clearly specific issues such as size, financial strength and organisational fluidity can present exceptions to this.
It is recommended that to grasp the intricacies and complexities necessary to obtain an overview of the task facing modern businesses it is best to read the text sequentially. However, each chapter is free standing. The argument is presented in four Parts:
• Part I: The challenge of changing times (Chapters 1–3). • Part II: Innovation from theory to practice (Chapters 4–8). • Part III: Linking creativity to strategic innovation (Chapters 9–10). • Part IV: Strategic innovation in changing times (Chapters 11–14).
To gain the most from the flow of the argument an open mind is necessary. Readers are invited to explore the exercises and audits featured in the text in an open spirit. Each chapter contains an exercise or case study and a selection of YouTubes to encourage the enquiring mind. The text is also supported by a website.
The challenge of changing times A surprising number of people confuse creativity and innovation. Creativity is necessary for innovation but not sufficient. It provides the sparks, the ideas that are progressed and actioned by investment in innovation. Change is a constant factor of life and impacts on all businesses. Human nature can welcome it or resist it. Most employees accept that incremental changes are necessary for the business of wealth creation but fewer welcome major change in their lives. Those at the helm of businesses large and small are traditionally conservative and risk averse. As the argument presented in the text clearly shows it is time for the business com- munity to review and redesign its approach to wealth creation activity. This requires a new acceptance and spread of ethical practices, management and leadership, creative thinking, with a medium- to long-term perspective.
Business creativity techniques are fun and rewarding but are skills that need to be encour- aged rather than resisted by top management and employees. A selection of basic tools are introduced in Chapters 4 and 5 which have been successfully applied in businesses. Whilst digital and IT sources can greatly assist creativity and innovation, they are no guarantee of success. They are not piecemeal quick fixes that can be actioned by tapping a keyboard or screen. A full commitment is required for a strategic approach.
It is time for business practitioners and students to step up to the challenge. Readers are invited to explore new organisational and management approaches. ‘Our doubts are traitors, and make us lose the good we oft might win. By fearing to attempt’ (Shakespeare, Measure for Measure) for ‘fortune brings in some boats that are not steer’d’ (Shakespeare, Cymbeline).
Thanks are due to the following people for their contributions to the second edition: Abi Goodman for the artwork, Andrew Jeffrey for the epigraphs at the beginning of each chapter and for the Toymaker II case study, Jill Goodman for proofreading and copy cor- rection. Thanks are also due to Sandra Dingli of the University of Malta and Asif Majid of Sheffield Hallam University for associate interest. Finally, thanks are due to the editorial staff at Routledge for their professionalism in managing the technical issues associated with this edition.
Malcolm Goodman Durham University
The challenge of changing times
1 The changing business environment
Can anything that is useful be accomplished without change? (Emperor Marcus Aurelius)
If I have seen further it is by standing on the shoulders of giants. (Isaac Newton)
Learning objectives This chapter explores:
• The importance of the changing global business environment. • The factors that have caused it and the major types of change. • Management response paradigms and their suitability to today’s global business
environment. • The challenges that contemporary organisations face.
Introduction Organisations of all kinds, large and small, private and public are experiencing profound changes in their business environment during the opening decades of the twenty-first century. Many organisations are being affected by rapidly changing business environments. Natural resources and energy supplies are becoming more expensive and advances in technology have resulted in the rapid expansion of virtual markets. Changes in the economic fortunes of individual nation states and their consequent social and political ramifications, together with an emerging shift in global power dynamics as developing economies rival established ones, have all presented organisations with the necessity of seriously reviewing their established modus operandi.
Chapter 1 sets the scene and provides an overview of the complexity of the shifting sands of the business environment. This establishes a platform for the text which addresses the equally complex matter of how organisations should identify, innovate and develop new ways of operating that are in tune with the challenges they face. (See Figure 1.1.)
4 The challenge of changing times
What is change?
Everything and everyone is exposed to change. It is a feature of the natural world and dictates the environment in which the human race exists. At a basic level change may be defined as ‘the movement away from a present state towards a future state’ (George and Jones, 2012).
A useful metaphor for change is a set of Russian dolls (Figure 1.2). The outer doll, which contains all the others, is the macro-environment that affects us all. The inner dolls can be taken to symbolise constituent or micro-environments that impact on our lives as results of political, economic, socio-cultural and technological factors. In the opening decades of the twenty-first century increasing concerns over the fate of the physical environment are being
Figure 1.1 Explaining the changing business environment.
The changing business environment 5
raised by many as global warming, land-use concerns, food provision and a rising world population are topics that feature daily in the world’s media.
The Concise Oxford English Dictionary (OED) defines change both as a noun and as a verb. Used as a noun change is defined as ‘becoming different’; ‘an alteration or modifica- tion (i.e. a change in someone’s facial expression)’ and ‘a new experience’. As a verb change is defined as something that concerns action, which ‘makes (something) different’. Change, then, is both about a state of being and about action to alter it.
The late twentieth century was a period of major social, economic and political changes. It was also a time in which there were big changes in knowledge – in how people see knowl- edge and how they use it. This period is now widely known as the beginning of the Knowledge Age – to distinguish it from the Industrial Age. The Knowledge Age is a new, advanced form of capitalism in which knowledge and ideas are the main source of economic growth (more important than land, labour, money, or other ‘tangible resources’). New patterns of work and new business practices have developed, and, as a result, new kinds of workers, with new and different skills, are required.
The macro-environmental factors that shape change can move in either small, almost imperceptible ways (incremental change) or in an explosive tsunami-like way and radically change the status quo in minutes. Change, whether incremental or radical (and people usually face a mixture of both) is a paradox of recorded history. Sometimes the environment changes positively and sometimes negatively. Theories about change have been exercising the human intellect for thousands of years. In that time there have been many explanations and stories about how change happens. Much of the recorded wisdom tells you what to do, but not neces- sarily how to do it. It provides both a challenge and a threat to human endeavour. Individuals and organisations that cope with the challenges brought about by change can be considered winners and those that fail to adjust their responses inevitably face a progressive and some- times sudden deterioration in their perceived well-being (McCalman et al., 2016, pp. 5–6).
Figure 1.2 Russian dolls.
6 The challenge of changing times
Understanding the causes of change
To respond effectively to rapid change, it is necessary to understand the underlying causes. There is a considerable volume of literature that shows that change has provided a major challenge to organisations since the Industrial Revolution (Grey, 2003). It is not something that is needed periodically; it is a business constant (Graetz et al., 2006). Specific changes in an organisation’s internal structure and external markets often derive from wider changes in society, economics or technology (Senior and Swailes, 2010). Change takes place both ‘out there’ in the tangible and physical world and ‘in here’ in the internal world of the human mind, with all its memories, thoughts and ideas. The world appears both ‘objective’ and ‘subjective’. A change project starts from the subjective, inside human imagination, and gradually works out into the reality of managing other people and organising things in the world (Table 1.1).
General trends in society politics and demography touch everyone. In recent years these have resulted in upsurges in the pensioner, youth and consumer markets; a shift in emphasis from community to a more individualistic society; increased interest in diversity (Roosevelt et al., 2001; Bohnet, 2016) and ageing populations. Markets and monetary flows can fluctu- ate, competitive ways can alter dramatically, and technology and innovation can fracture
Table 1.1 Key general forces affecting businesses in developed economies
Socio-cultural Ageing populations Growth of youth markets Trend toward individual centred society Diversity Rise of consumerism
Economic Present, recent and projected economic climate Business cycles More capital flows More countries linked to capitalism Emergence of China and India as major economic powers Slower domestic growth of developed economies Rising consumer debts Competitive threats Privatisation Fewer tariffs Globalisation
Economic Ages Shift from Industrial to Knowledge Age Pace of change
Technological Rapid advances in communication Rapid advances in information technology (IT) and IT networks Commoditisation Development of global networks
Environmental Global warming Dwindling finite resources, e.g. minerals and carbon fuels Ecological issues, e.g. carbon footprint Increase in immigration flows Increased government legislation, e.g. EU clean air dictates
The changing business environment 7
established patterns. Technological advance in the twenty-first century is accelerating and is expected to accelerate exponentially. In particular the revolution in IT is having a profound impact on the business environment and many companies are also facing increased chal- lenges from ecological and ethical forces (Figure 1.3).
Most managers in the developed economies accept that a diverse workforce is benefi- cial both to employees and organisations. Whilst cultural diversity is generally encouraged, gender diversity has tended to gain acceptance but is not always pursued with much vigour (Bohnet, 2016). In the less developed economies both cultural and gender diversity are often constrained by strong cultural attitudes and beliefs. Diversity bias is a complex problem that globally active organisations are seeking to address in order to develop a new mindset. As global businesses find that the going gets progressively more difficult they are giving more strategic attention to innovation. Successful diversity programmes break down stereotypes and enhance the creative process (Kurtzberg, 2005; Hewlett et al., 2013). Inherent diversity, however, is only half of the equation. Leaders also need acquired diversity to establish a cul- ture in which all employees feel free to contribute ideas (Roosevelt et al., 2001).
People all over the world are expecting more out of life. Despite the emergence of the global economy millions still live out their lives below the official United Nations breadline. Basic needs to sustain life such as food, water, shelter and security are yet to be met in many countries. The technological revolution that has launched the digital age is fuelling people’s wants for products and services that will improve their standard of living, but the onward march of global communications often frustrates people who now know about the availabil- ity of such things but find it difficult or are unable to afford them.
IKEA react to strong western buyer’s markets for home furnishings
IKEA have found that the demand for home furnishings in the developed western markets has nearly reached saturation. Despite this IKEA have a target of almost doubling sales by 2020; changes in customer buying activity was a spur to rethinking the way the com- pany conducts its business. IKEA has decided to concentrate on environmentally friendly business initiatives worldwide and to increase its penetration of the developing countries.
Source: Adapted from ‘We’ve hit peak home furnishings, says Ikea boss’, The Guardian, 18 January 2016, https://www.theguardian.com/business/2016/jan/18/weve-hit-peak-home- furnishings-says-ikea-boss-consumerism (accessed 29 November 2016).
Figure 1.3 Business environment changes. Note: Horizontal axis indicates the speed of transition from sellers’ to buyers’ market conditions.
8 The challenge of changing times
The tides of economics change imperceptibly and sometimes abruptly. Markets and mon- etary flows can fluctuate, competitive ways can alter dramatically, and technology and innovation can fracture established patterns. The global financial crisis of 2008 has had a major impact on the economies of both the developed and developing world. Many busi- nesses have been severely affected by the paradigm change from sellers’ markets to buyers’ markets. The former is characterised by demand for goods and services generally being in excess of the supply. This has been the case in many developed countries for several decades and be can described as ‘business management’s heaven’. The successful business response was to increase the volume of products and services placed on world markets to achieve a very profitable return. The latter, a buyers’ market, is characterised by the supply of goods and services being in excess of the demand. This can be imagined as ‘business management’s hell’, as competition is fierce and businesses need to be careful to meet the expectations of customers who have a wide choice of suppliers.
To achieve profitable business many organisations are following the trend of commoditi- sation together with the outsourcing of goods and services to achieve low market prices. This can result sometimes in their risking criticism in their domestic markets by tacitly accepting ethical practices that would not be regarded as acceptable in their home market.
Currently the global economy is slowing down and at the time of writing the International Monetary Fund have called upon states to increase public investment or risk derailing recovery. Severe downside risks face the world economy due to China’s rebalancing, lower commodity prices, the collapse in the price of oil (which fell to $28 a barrel in January 2016) and a pessimistic view of the fortunes of some countries in the emerging world. Globalisation causes economies to become increasingly interconnected. This has resulted in a greater level of interdependency, which leads to greater volatility, uncertainty and complexity.
Unilever prepares for tougher global market conditions
To counter growth potential opportunities in the buyers’ markets of the developed economies Unilever expanded into emerging markets such as China, Brazil and Russia. However, these once booming markets are experiencing fall-backs in their growth per- formances. China’s growth is slowing, Brazil is in recession and Russia is struggling under western sanctions. Stock prices and the oil price have tumbled since the start of 2016, triggering fears that the world economy is entering a recessionary phase.
Source: ‘Unilever Chief anticipates year of crises as stock markets falter’, The Guardian, 19 February 2016; ‘Unilever warns of “tougher” 2016’, BBC News, 19 January 2016.
One remedy for indebted countries is to check and reduce high levels of indebtedness. Whilst the banking fraternity loudly claim that countries should admire their special cognitive skills, Daniel Kahneman (2011), winner of the Nobel Economics prize, dramatically exploded this as cognitive illusion. The probability of successful trading he found largely to be governed purely by chance as with rolling dice.
According to Parkin and Bade (2011) a business cycle is the periodic but irregular up-and- down movement in economic activity, measured in terms of real gross national product
The changing business environment 9
(GNP) and other macroeconomic variables. They argue that a business cycle is not a regular, predictable or repeating phenomenon like the swing of a clock’s pendulum. Its timing is random and, to a large extent unpredictable. A business cycle is identified as a sequence of four phases:
1 Contraction (a slowdown in the pace of economic activity). 2 Trough (the lower turning point of a business cycle, where a contraction turns into
an expansion). 3 Expansion (a speed up in the pace of economic activity). 4 Peak (the upper turning point of a business cycle).
A recession occurs if a contraction is severe enough. A deep trough is called a slump or a depression (Figure 1.4).
Business cycles, according to the International Encyclopaedia of Economics, refer to ‘time periods of rising prices, employment, and output that are followed by declines in these macro-economic quantities’. There are two streams in business cycle research, one generat- ing ‘theory-based cycles’ and another generating ‘data-based cycles’. The first stream of research establishes theories which attempt to explain why and how business cycles arise in an economic system. The second stream of literature is more focused on methods of identify- ing, measuring and describing the business cycles. Scholars from this stream, notably those in the National Bureau of Economic Research (NBER) and the Economic Cycle Research Institute (ECRI), argue that properly understanding business cycles relies first on collecting and studying observable data.
The development of digital technology has quickened the emergence of the Knowledge Age at the expense of the Industrial Age. Computer controlled systems have revolutionised manu- facturing and service industries. Knowledge Age worker-citizens need to be able to locate, assess and represent new information quickly. They need to be able to communicate this to others, and to be able to work productively in collaborations with others. They need to be adaptable, creative and innovative, and to be able to understand things at a ‘systems’ or ‘big picture’ level. Most importantly, they need to think and learn for themselves. Digitisation is also shaping social attitudes and choices through the popularity of social networking
Figure 1.4 Business cycle troughs and peaks.
10 The challenge of changing times
platforms such as Facebook and Twitter, which, together with sites such as YouTube enable organisations to get closer to discovering customers’ perceived value expectations. The pur- chasing patterns of supermarkets and IKEA have transformed the face of retailing with deep impact across the global economy. Facebook, Google and Twitter have transformed global advertising and Amazon has transformed the book trade. The music industry has been revolu- tionised as digitisation has changed the way people collect and listen to music. The explosive trend toward increasing digitisation has disrupted and transformed most business activities and the pace of change continues to disrupt world markets as digital technology becomes cheaper and the process of miniaturisation continues. Advances in the development of digital technology are also boosting the rate at which new discoveries are occurring, ranging from spectacular discoveries in space and the application of new micro techniques in the medical profession.
Many companies are also facing increased challenges from ecological and ethical forces (Wetherly and Otter, 2011). The world environment is under pressure from climate change, which is being intensified by excessive carbon emissions by both the developed and rapidly developing economies. The key questions here are:
• How fast will the climate change? • How fundamentally will it change? • How will it impact on organisations? • How will natural resources be restored?
Barclays: out of Africa
The story of Barclays’ supposed failure in Africa has as much to do with Barclays as it does with Africa as a continent. Even though Barclays has maintained a presence in Africa for more than a century, the bank was very slow in taking up the fresh opportu- nities that presented themselves in the past decade.
Barclays was not as nimble as other banks, such as Standard Bank, Ecobank or GT Bank, which have been snapping up opportunities in Africa. It was bogged down by the internal bureaucracy of tying up all its assets in a merger with South Africa’s ABSA bank in order to create Barclays Africa.
That process began in 2005, and is yet to be fully completed, and both banks have retained their separate identities thus far.
Sources: Mbele, ‘Why is Britain’s Barclays Bank pulling out of Africa?’, BBC, Africa Business Report, 1 March, 2016; Treanor, J., ‘Barclays plans sell-off of African operations’, The Guardian, 26 February 2016.
New sources of energy will need to be found as fossil fuels are depleted. Globalisation causes economies to become increasingly interconnected. The ecological voice calls for the natural environment to be cleaned up and responsibly managed. The combination and interaction of these forces explains why so many businesses have experienced a sudden change in their real-time operating environments at an increasing pace since the turn of the millennium.
The changing business environment 11
These new external conditions have severely challenged both private sector MNCs and SMEs as well as public sector organisations. Turpin (2015), whilst recognising the impor- tance of the forces in Table 1.1, emphasises the challenges that these forces bring to all businesses. The fortunes of economies and businesses are acutely affected by the dynamic shifts in the ages of economic history and the ability of economists’ theories and practices to guide national economic policies. In the midst of the turbulence the profession itself has cried ‘mea culpa’ (Conway, 2010).
Cause, effect and apprehension
Change is everywhere in business, and people do not appear to be very happy about it. But it is not just nostalgia or laziness that cause the negative reaction. Change is rarely managed well. What do managers get wrong about change? There is quite a long list:
• They underestimate how long it will take people to accept change. • They fail to recognise how difficult it is to spread the message that change may be neces-
sary or unavoidable. • They do not understand what change feels like beyond the boardroom or their own office. • If they are successful in getting the organisation to accept the need for change, they forget
to explain that the new direction or mission may change again and possibly quite soon.
The UK Cabinet Office made a set of predictions on the forthcoming business decade. It foresees the real emergence of a UK ‘e-economy’ with faster, nimbler firms driven by tech- nology and large companies shrinking to more manageable scales. The report, called: ‘2020 vision’, highlights the emergence of a much greater dependency on IT and mobile commerce by 2020, as access points and connection speeds increase exponentially and entrepreneurs seek to tap further into the low overheads that virtual business offers. This new Industrial Revolution is on its way and will continue to be fuelled by the growth in technology that has been taking place since the development of the PC in the early 1980s and is now driven by smartphones, tablets and mobile commerce.
Although access to funding remains a major issue for SMEs, in order to grow within the current economy, it is essential that smaller businesses embrace the digital opportunities available to reach and connect with their customers online. The good news is that digital marketing is not as complicated or expensive as some maintain.
Complexity and change
The interaction, convergence and acceleration of the four major forces of change summarised in Table 1.1 generate complexity in national, international and global markets. Globalisation causes economies to become increasingly interconnected. This has resulted in a greater level of interdependency, which leads to greater volatility, uncertainty and complexity.
In an era affected by turbulent and far reaching change in the business environment, wise companies and organisations will refocus their view of business from a tendency to emphasise costs and prices to one that places a greater significance on successfully meeting consumers’
12 The challenge of changing times
perceived values. In other words, they discover, develop and provide what consumers want instead of assuming that the least-cost production paradigm should dominate their activities.
The pursuit of profit, and by implication corporate wealth, is seen by many to be influenced by standard economic theory. It is the art of successfully combining traditional economic factors of production, land, labour and capital. Whilst this provides a sensible direction to modern corporate activity, it needs to be expanded to include a philosophy and a functional expertise that can foster and deliver innovative solutions to the growing customer prefer- ence for products and services that meet their perceived values rather than for standardised offerings. This calls for the inclusion of creativity as a key factor of production. This is gener- ally accepted as critical in Europe and North America but less so in Africa, Asia and South America where a risk averse culture is more common.