Book review

Victor Newman reviews Building the Innovative Organization

TITLE: Building the Innovative Organisation
AUTHOR: James A. Christiansen
PUBLISHER: Macmillan Business, 2000
ISBN: 033380483X

The purpose of this book is to help managers learn how to encourage the practice of innovation. The author points out that few managers and companies are consistently good at innovation, and that this weakness may be due to faulty management systems that inadvertently block innovation. The book is designed to provide comparative, illustrative examples of good and poor practice, and each chapter delivers useful diagnostic questions for the reader to apply within their own organisation.

In his longtitudinal, cross-industry study of 20 companies, Christiansen suggests that the management methods of highly innovative companies are significantly different from less innovative companies. These differences are apparently more than just a matter of how projects are managed, but include supporting general management systems. The differences include strategic formulation and business unit management, decision making, the use of competencies, structure, communications, and incentives. Differences observed within innovation project management include idea-stimulation, laboratory management, the involvement of senior management, and funding.

The companies within the study are broken into two populations; eight primary companies whose innovation management practices and their evolution were studied in detail, half of which were independently-managed divisions of a single diversified European manufacturing group, the other half being fully independent manufacturers based in Europe or the US. Managers were interviewed in the remaining balance of twelve companies, from eight additional industries.

The first, introductory chapter is followed by eight other chapters. Chapter two introduces the phases in the innovation process, the various management tools or structures, systems and practices impacting innovation performance. Christiansen integrates levels and types of intervention within a case study against a timeline in what misleadingly looks at first like a force-field analysis diagram, to demonstrate the complexity of intervention and interactions. This tour de force is reconfigured into another diagram that classifies interventions into three levels: firstly, intervention in single projects; then up a level to changing the way projects (i.e. more than one) are managed as a class of activities; then finally to changing the way business systems are managed. And yet Christiansen offers even more: a diagram detailing the relative impact of these interventions across the project lifecycle, concluding with a very high-level, generic innovation project lifecycle model. This is followed with his four key components or goals of innovation (process) performance: speed, cost, and customer need (current and future). The author makes the point that interventions tend to be isolated within these four, and need to be understood against the three broad phases of the innovation process, namely idea, funding and development. Interventions and phases are integrated within another useful matrix, and discussed.

A significant weakness in the approach is the failure to develop objective measures around the innovation process or even define innovation, leaving it to be taken as a given. This means that the relative ranking of primary companies’ innovation performance is based on poll results of panels of managers; in other words, their reputation for innovation. And as we know, the reputation may not be the reality. At this point, the approach bears some resemblance to Deal and Kennedy’s semi-anthropological and popular approach to investigating robust and long-lived corporate cultures, with its reliance on qualitative perceptions of success and interviews. The section on knowledge is minor (p.108), while the discussion on creativity-practice within the case study company population has some interesting lessons worth noting in chapter six: ‘Corporate-level tools for managing projects and ideas’.

Chapters three to eight describe how each of the 20 management systems and practices detailed in chapter two can be used as a tool to improve innovation performance, suggesting that each tool can be manipulated to improve innovative performance. Chapter nine concludes the book by offering the common sense advice to managers to begin at the beginning, and to fix those things that can be fixed. Christiansen’s key message is to understand your innovation process as a system and to understand the difficulties of systemic interventions, but not to be too afraid of applying a tool that could make the difference.

This book is potentially highly significant in focusing on organisations’ primary process, the process that demonstrates the ability to create and integrate new knowledge and deploy it to deliver new market value. Although not badged or described as a knowledge management book, it encourages readers to build and manage their knowledge around their innovation process.

This book is the direct successor to Deal and Kennedy’s original and influential 1982 book Corporate Cultures. In brief, their idea was that distinctive, organisational cultures that were expressed in qualitative terms that helped to express a shared value-system and sense of purpose, tended to outperform those organisations whose goals were expressed as quantitative performance targets. The components of successful, robust cultures were prescribed as founded on a “deep and abiding shared purpose” based upon the continually reinforcing interplay of cultural elements: history, values, heroic exemplar figures, rituals and storytelling.

The contribution of the original 1982 book was to promote the issue of organisational culture to a strategic concern and to recognise cultural projects as a legitimate form of work and not just an academic occupation of limited relevance. Cultural affinity became a dimension that influenced merger decisions. Human resource departments took on the work of cultural measurement through staff attitude surveys. More recently, cultural benchmarking initiatives have attempted to influence performance through the emulation of ‘winning’ cultures.

The authors’ stated hope was that managers would use their book to connect organisational competitiveness with the individual’s intrinsic need to belong to organisations that have a life of their own or a meaning beyond profit. The authors feel that the revolutions of organisational redefinition, of leanness and reengineering, have been achieved through the destruction of individuals’ sense of membership, shared identity and meaning; in other words, that the cost of delivering short-term shareholder value has tended to be the original culture of the organisational. This observation is ironic; it’s almost crocodile tears when one considers that Deal and Kennedy did point out that culture was the obstacle to change. It’s not surprising that those driving change took them at their word and chose to ignore the issue of creating distinctive, replacement cultures. It was just so much easier to destroy than to build when you’re being paid to cut the fat out of organisations to free the muscle that could be used to deliver in the future. Of course, the problem is that, in cutting out the heart or the culture of the organisation and focusing organisational design onto efficient processes, all that happened (which is the subtext to the book) is that the ability to innovate began to disappear as organisations became very efficient at competing on price.

The book is in three parts including thirteen chapters. The first part is a single chapter that reworks the original content using current management literature to reinforce the original messages linking strong culture and success. The problem with much of the supporting research is that it cannot prove that strong culture determines success. Successful organisations’ ability to provide visions and values documents may just mean that they know how to play the culture/ brand associations game: the impact of Deal and Kennedy’s original theory may just mean that successful organisations don’t miss a trick, and that includes playing this game, and well enough to fool journalists and industry analysts!

Part two documents the damaging impacts of shareholder value, downsizing, outsourcing, mergers, networked computers, and globalisation of company cultures.

Part three concentrates on the practice of rebuilding cohesive cultures from the damaged players: re-emphasising the importance of cultural leadership clarifying and consistently reinforcing the power of clear identity, and shared values to drive successful behaviour.

The book is ably illustrated with examples and stories that reinforce the old message. The key weakness is the tendency to view culture as a technology in its own right without understanding that it is the by-product of an on-going process of successfully solving the problems that deliver new technologies and values to the customer. The fundamental message from the authors is valuable. It’s not about whether to work on competitive advantage or culture: you need to do both.

Victor Newman is chief learning officer at Pfizer Research University. He can be contacted at: victor_newman@sandwich.pfizer.com