*Due to confidentially of one of the companies, one case description is not included in the final version. This company is named Company X in this research.
How NCW practices can stimulate employees’ creativity.
MSc Business Administration – Entrepreneurship & Innovation – Master Thesis Filip Lacor
Student number: 5978718 University of Amsterdam
Amsterdam Business School - Faculty of Economics and Business Supervisor: Dr. Wietze van der Aa
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Statement of originality
This document is written by Student Filip Lacor who declares to take full
responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and
that no sources other than those mentioned in the text and its references have
been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision
of completion of the work, not for the contents.
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Abstract
Management innovation is a topic that is has been addressed extensively in the academic literature. This study investigates a new practice of management innovation to boost creativity of employees to spur innovation in organizations. This practice is called non-commissioned work (NCW) time and is a growing trend among organizations to give employees structured periods of autonomy during which they are allowed to allocate time to work on projects besides their core business tasks. The main objective of this study is to test the proposition that employees feel more creative when participating in a NCW practice compared to employees who did not participated. The principle of NCW time entails four constructs that can influence individuals’ creativity: intrinsic motivation, autonomy, willingness to take risks, and encouragement by supervisor(s) and manager(s).
A survey is conducted to collect quantitative data, which is distributed within four organizations, whereas qualitative research led to deeper insights of the NCW practices. Based on the literature a conceptual model is presented with expected relationships between NCW, the constructs and creativity. Results showed that three of the four constructs are positively related to creativity. However, significant relationships between NCW and creativity; and between NCW and three of the four constructs were not found. The study did find a significant positive correlation between NCW time and willingness to take risks; and a mediating effect of willingness to take risks. In this study it can be concluded that there is no significant difference between the levels of creativity of participants of NCW practices compared to non-participants.
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Content
Abstract ... 3
1. Introduction ... 6
2. Management Innovation ... 9
2.1 Management innovation – What is it? ... 9
2.2 Management Innovation – why? ... 10
3. Theoretical Framework ... 13
3.1 Non-commissioned work ... 13
3.2 Creativity ... 15
3.3 Intrinsic Motivation ... 16
3.4 Autonomy ... 18
3.5 Encouragement by supervisor(s) and manager(s) ... 20
3.6 Willingness to take risks ... 22
3.7 Groups in NCW practices ... 24
3.8 Conceptual Model ... 24
4. Cases ... 26
4.1 Atlassian - ShipIt Days ... 26
4.2 Transavia – Lean Startup Team ... 28
4.3 XL Team – Pay and play days ... 31
4.4 Summary cases ... 33
5. Methodology ... 35
5.1 A mixed research methodology ... 35
5.2 Semi-structured interviews ... 36 5.3 Online Survey ... 37 5.4 Measures of Construct ... 38 5.5 Sample ... 41 6. Results ... 43 6.1 Bivariate Correlations ... 43 6.2 Mediation Analyses ... 45 6.3 Independent T-Test ... 46 6.4 Additional Findings ... 47 6.5 Conclusion tests ... 49 7. Discussion ... 50
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7.1 Discussion of the findings ... 50
7.1.1 Verifying correlation effects findings from the literature ... 50
7.1.2 Hypotheses to test for medation ... 51
7.1.3 Hypotheses to test for groups ... 54
7.2 Implications ... 55
7.3 Contributions, Limitations and Strengths... 56
8. Conclusion ... 59
9. References ... 61
Appendix 1: Survey ... 66
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1. Introduction
“Management that is destructively critical when mistakes are made kills initiative. And it’s essential that we have many people with initiative if we are to continue to grow.”
- WILLIAM L. MCKNIGHT, FORMER PRESIDENT AND CHAIRMAN OF THE BOARD, 3M The current business environment is characterized by rapid technological change, shortening product life cycles and globalization (Gumusluoglu & Ilsev, 2007). Organizations need to adapt to this dynamic environment and be more creative and innovative to survive, compete, grow and lead. This can be achieved by generating new revenue streams, opening doors to new markets, competing with competitors, or creating competitive advantages. To foster these processes organizations apply all kinds of management innovations or new innovation tools. Examples of noteworthy management innovations are Six Sigma, the spaghetti organization, or lean manufacturing (Birkinshaw & Mol, 2006).
There are many different types of innovations developed within organizations. The most obvious type of innovations are technological and product innovations. However, over the last decades new subfields have emerged and gained more attention (Birkinshaw & Mol, 2009). Management innovation is one of those new subfields (Birkinshaw et al., 2008). An interesting management innovation which is used in organizations is non-commissioned work time (further NCW) (Burkus & Oster, 2012); it is a way of encouraging innovation (Vise, 2005). Organizational structure will change to an ambidexterity form: the right balance between alignment (exploitation) and adaptability (exploration) (Birkinshaw & Gibson, 2004). NCW is work whereby people are somehow free to do what they want, without a prescribed task like commissioned work. Whereas commissioned work are tasks dedicated by people higher in the hierarchy. Employees could feel more constrained when doing the tasks (Pink, 2009). One of the incidentals of NCW is the level of the autonomy that individuals have over their time, task, team and technique. NCW time can stimulate creativity, what might flourish and innovation(s) might result (Burkus & Oster, 2012; Pink, 2012).
One of the best known examples of NCW time is executed at Google. Although, it was not the first company with a NCW practice. 3M developed their 15 percent time rule in the 1950s and is used since 1948 (3M, 2015). Google introduced their 20 percent time rule almost a decade ago (GoogleBlog, 2006). Employees at Google are allowed to spend a certain percent of time on side projects if approved by managers. Projects could be the result of ideas
7 of which they were passionate about. Gmail and AdSense are examples of products that derived from this time. Most companies that are known to be executing a NCW practice are IT related. They adapted the practice to fit to their organization’s characteristics. LinkedIn has launched their own inCubator program and Atlassian is using a 24-hour hackathon (WIRED, 2012). NCW practices may not always succeed after adoption in certain organizations. This was the case in a Dutch mobile app developing company named M2Mobi. They had been using a 10 percent practice but unfortunately they had to stop it because of disappointing results.
Generally, NCW time is a practice to engage and encourage employees to pursuit their dreams and spend working time on their own projects. In their pursuit employees can use the resources of the company, build up working teams and/or solve problems. This research tries to display effectiveness of the NCW practice within selected organizations on employees’ creativity. NCW time is a practice that has received little to no attention of the academic literature and therefore no research has been done to the effects it could have on the creativity of people and in this case on employees in the selected organizations. For creativity the conditions are very important (Edmonds & Candy, 2002). The situation is such that it might be necessary to create the right conditions to brisk up creativity in certain people; they already had these creative properties but the right conditions are needed to bring the best out of each person’s potential.
A relationship between NCW time and individuals’ creativity might be the case as proposed by Burkus & Oster (2012). However, they did not verify their propositions. Their propositions entail a relationship between NCW, the constructs (autonomy, reward salience and willingness to take risks) and individuals’ creativity. Both the level of autonomy and willingness to take risks should be positively related to individuals’ creativity whereas reward salience should be negatively related (Burkus & Oster, 2012). Based on the scholarly literature the influences of the constructs on individuals’ creativity are proven. However, it has not yet been proven whether these influences also are applicable when they derive from a NCW practice. For this research the constructs to investigate are level of autonomy, intrinsic motivation, willingness to risks and encouragement by supervisor(s) and manager(s) (Burkus & Oster, 2012). It can be expected that these four constructs in a NCW practice lead to an increase in individuals’ creativity. A distinction is made in two groups of respondents. The first group consists of employees who participated in the company’s NCW practice and completed the survey how they felt during the practice. Whereas the second group completed
8 the survey how they experience their daily activities of their work. The central question in this research is:
Do employees experience a significant higher level of individual creativity when participating in a NCW practice than the employees who do not participate in a NCW practice?
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2. Management Innovation
As mentioned in the introduction, NCW time can be seen as a management innovation (Burkus & Oster, 2012). But what is a management innovation and why are they introduced in organizations?
2.1 Management innovation – What is it?
The most general definition of innovation is by Rogers (1983, p.11): “an innovation is an idea, practice, or object that is perceived as new by an individual or other unit of adoption”. The most obvious type of innovations are technological and product innovations. However, a number of new subfields of innovation have emerged over the last decades (Birkinshaw & Mol, 2009): e.g. business model innovation (e.g. Chesbrough, 2010; Sosna et al., 2010), service innovation (e.g. Berry et al., 2006), and management innovation (Birkinshaw et al., 2008). A few examples of noteworthy management innovations are Six Sigma, the spaghetti organization, or lean manufacturing (Birkinshaw & Mol, 2006). Birkinshaw, Hamel, and Mol identified 175 significant management innovations from 1900 to 2000 (Hamel, 2006).
Several definitions of management innovation occurred in the literature. Most often these are formulated by Birkinshaw, Hamel, or Mol, or by combinations of these authors together. Related articles regularly use the definition of Birkinshaw et al. (2008, p.825): ”the invention and implementation of a management practice, process, structure, or technique that is new to the state of the art and is intended to further organizational goals”. Other researchers refer to management innovation as something that is new to the firm and adapted from another context, such as a peer firm (Zbaracki, 1998). However, for this research an addition will be made to the latest definition. The management (or NCW) practice does not have to be new to the state of art, but it can also be new to the firm (Birkinshaw & Mol, 2009; Walker et al., 2010). Though, in the literature several related terms of management innovation are used with some minor differences (Volberda et al., 2013) e.g. organizational innovation (Damanpour & Evan, 1984; Martinsuo et al., 2006), administrative innovation (Damanpour & Aravind, 2012), and management practices (Mazza & Alvarez, 2000). Organizational innovation is sometimes used to imply any type of innovation generated by organizations, including new products or services, and new process technologies (Damanpour & Evan, 1984).
Management innovations consist out of a process starts with a novel problem within a certain organization that sparks the motivation for change and ends with the validation of the
10 management innovation to build its legitimacy (Birkinshaw et al., 2008; Birkinshaw & Mol, 2006). This process is triggered when the market for fashion falls (Birkinshaw et al., 2008). Organizations can either come up with a completely novel management innovation of its own (and address the earlier described process), or they can copy management innovations from external sources and simply implement them (Birkinshaw et al., 2008). However, it is not that easy to ‘simply’ implement a management innovation “off the shelf” (Birkinshaw et al., 2008). Organizations need to find out which management innovation to incorporate. It is possible that organizations themselves enter the phase of initiation. They learn of the existence of the innovations, consider it suitable for the organization and eventually propose its adoption (Damanpour and Schneider, 2006). Or management fashion setters which act as external change agents (consulting firms, management gurus, business mass-media publications, and business schools), can play an important role regarding the implementation of specific management innovations; they disseminate management fashions (Abrahamson, 1996; Wright et al., 2012) and can create a ‘hype cycle’ around a management innovation (Birkinshaw, 2014). Besides the role market participants (like consultants) play by offering ideas about introducing new management practices to organizations, internal and professional sources can also offer ideas (Birkinshaw & Mol, 2009)
2.2 Management Innovation – why?
Birkinshaw et al. (2008, p. 828) argue that “management innovations are introduced by individuals with the goal of making their organization work more efficient”. Besides efficiency, management innovations aim to increase effectiveness of the internal organizational operating and administrative processes (Walker et al., 2010). Identification of a novel problem is also a driver for the creation of management innovations (Hamel, 2006; Birkinshaw et al., 2008). Or it is needed to make technological innovation work (Mol & Birkinshaw, 2006). Efficiency may derive from process innovations, combined with innovations in management principles a long-lasting competitive advantage can be created or strengthened (inter alia because of its context specific nature) (Hamel, 2006; Birkinshaw & Mol, 2006; Birkinshaw et al., 2008; Vaccaro et al., 2012). Consequently the organization can propel to unprecedented levels of performance (Birkinshaw, 2014). Another source contributing to a long-lasting competitive advantage is the difficulty to imitate it (Mol & Birkinshaw, 2006). The management innovation has the greatest potential for a competitive advantage when it is radical, systematic and platform-based (Mol & Birkinshaw, 2006). The process from a novel problem to actually new and deeply rooted management practices
11 requires much efforts, but if it results in a competitive advantage the payoff can be substantial (Hamel, 2006).
Birkinshaw & Mol (2009) state that there is little focus in the literature on why organizations introduce new management practices. They researched under what conditions organizations introduce new management practices and if the introduction is associated with future productivity improvements. Their research shows that management innovation is a consequence of an organization’s internal context and the external search for new knowledge. At present much more research has been conducted to the antecedents that facilitate the pursuit of management innovation: managerial- , intra-organizational- , and inter-organizational antecedents (Volberda et al., 2013).
Gebauer (2011) suggests that management innovations drive dynamic capabilities. These capabilities make sure that organizations can respond in a proper way to changes in the business environment (Teece, 2007; cited in Gebauer, 2011, p.1238). Despite that management innovations are a crucial ingredient for improving personal and organizational performance. Yet, they still occur infrequently (Birkinshaw & Mol, 2008).
Klippel et al. (2008) state that management innovations are the most complicated type of innovation to copy by competitors because they have to understand the culture underlying the set of principles established by the innovative company. Besides the latter mentioned principles, culture underlying thoughts and previous layers of innovation also have to be taken into account when copying management innovations (Birkinshaw, 2014). Competitors will take longer to respond with copying the management innovation when the principles underlying are more unconventional (Hamel, 2006). Because management innovations are harder to copy often external agents are brought in to justify, shape and legitimize the activity (Birkinshaw & Mol, 2006).
This does not mean that an implemented management innovation that was copied will not succeed. On the contrary, it can even exceed the benefits of the organization in which it was developed. An example of such a case is of the implementation of the Six Sigma method at General Electric, which was originally developed at Motorola (Hamel, 2006). Nevertheless, the process of adoption and implementation contains the required activities and challenges to succeed. One of those activities is the adaptation to make the management innovation firm specific (Volberda et al., 2013).
12 As described in the introduction a NCW practice can be seen as a management innovation. Compared to the described management innovations in this chapter, NCW practices are also intended to create efficiency, effectivity, further organizational goals and accelerate innovation within the organization. Furthermore, the next chapter will present the literature regarding NCW, whereas in the chapter Cases, several NCW practices will be analyzed.
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3. Theoretical Framework
Currently, NCW practices are present in more organizations or they are considering implementing it. The main reason why is to accelerate innovation within the organization. However, they have more incentives to use NCW practices: e.g. to get the most out of their employees, to let employees learn, to create synergy and fun, and to tackle specific problems or touch points.
This chapter reviews the existing literature of non-commissioned work, creativity, motivation, autonomy, encouragement and willingness to take risks. Based on this literature the conceptual model is proposed.
3.1 Non-commissioned work
Daniel Pink (2012) refers to a study conducted by Amabile et al. (1993) on what motivates artists. In this study they have collected art derived from commissioned and non-commissioned work (further NCW) of 23 painters and/or sculptors, who created a total of 460 pieces of art. Amabile et al. (1993) concluded that the non-commissioned, self-directed art that was found to be significantly more creative, interesting and valuable by the panel of art experts. Amabile et al. (1993) were one of the first authors to relate NCW to individuals’ creativity. However, these assumptions were made between creativity and artistic originality (Amabile, 1998).
NCW time is defined by Burkus & Oster (2012. p. 49) as “structured periods of autonomy during which employees choose what projects to work on and how to complete such projects”. In case of this research, the definition is adjusted. The completion of projects is disregarded from the definition and there is explicitly chosen not to include whether employees are paid during participation in the practice because of intrinsic- and extrinsic motivation and the differences between NCW practices. The NCW practices that are applied in the cases are explained in the next chapter. An example of a difference is that not in all practices approval is needed to start with projects. Therefore (managerial) approval is left out of the definition. This also accounts for the origin of the projects; free to choose kind of project or related to a specific problem. The following definition of NCW is used in this study:
“Structured periods of autonomy during which employees are allowed to allocate time to work on projects besides their core business tasks”.
14 However, prior to spending time in the structured periods of autonomy most often the projects have to be approved by managers, supervisors or management board. The relationship between non-commissioned work and creativity can also be translated to an organizational perspective, such as Google’s 20 percent, in which engineers can spend 20 percent of their working time on whatever they choose (Schmidt & Rosenberg, 2014). As a result of spending working time on NCW projects, employees are getting paid during that time. Also other organizations introduced NCW practices such as 3M (Garud et al., 2011), Atlassian, Twitter and LinkedIn (Pink, 2012). Instead of radically overhaul an organization a suited NCW practice can be implemented. However these organizations have adapted the practice all differently to their organizational culture and beliefs.
If NCW is allowed at the office, creativity might flourish and innovation(s) might result (Burkus & Oster, 2012; Pink, 2012). However, organizations and managers need to encourage it (Burkus & Oster, 2012). Due to these practices employees will have a certain amount of time to spend on side projects and have specific tasks, as individuals or in teams. The practices can be seen as intrapreneurship; entrepreneurship within existing organizations (Antoncic & Hisrich, 2001). Within NCW time a distinction is made by Burkus & Oster (2012) between two types of implementation: transient and persistent. Transient NCW time are structured events “where employees are given autonomy for distinct periods of time” (Atlassian’s FedEx days), whereas persistent NCW time means that “employees are given autonomy for a specific percentage of work time” (Google’s 20 percent time) (Burkus & Oster, 2012, p.50). Keep in mind that these types can both be applied in organizations if there are seen as stages. If a manager thinks the desired results are already produced in the transient stage they can switch to a persistent stage (Burkus & Oster, 2012). However, these two types represent the two best-known methods organizations are using. Companies such as 3M and the Dutch Government make remarks that they do not allow employees to just do something during this free time. It has to be filled with useful projects or self-development activities for which almost always approval is needed for. Otherwise they won’t have the right to use this time besides their core businesses tasks.
Further, with different kind of NCW practices other guidelines are set. Three examples are described:
1. 3M’s 15 percent time is the first NCW practice (as far as known) initiated to encourage employees to spend 15 percent of their paid working time on their own
15 ideas and projects (3M, 2015). The practice has become an opportunity for employees to explore creative ideas (Garud et al., 2011). 3M offers its resources to follow their own insights in pursuit of problem solving, solely or in a team (3M, 2015).
2. LinkedIn’s InCubator: engineers can get 30 to 90 days away from their regular work (annualized) to develop ideas of their own into products. Their ideas must first be developed into prototypes and clear two rounds of judging (WIRED, 2012).
3. Apple’s Blue Sky program: a small group of employees is allowed to take two weeks out of their normal working schedule to work on special pet projects outside of their normal responsibilities at Apple (TheNextWeb, 2012).
Managers need to find the right balance between alignment (exploitation) and adaptability (exploration) in their business units to create ambidexterity (Gibson & Birkinshaw, 2004; Benner & Tushman, 2003). Here alignment focuses on improving performance in the short term, where the key success factors are efficiency, discipline, incremental improvement and continuous innovation (O’Reilly & Tushman, 2008). Adaptability focuses on the long term by moving quickly toward new opportunities (Gibson & Birkinshaw, 2004). Organizations can create structural ambidexterity to create separate structures for different types of activities (Birkinshaw & Gibson, 2004; Raisch & Birkinshaw, 2008). Such as Google’s 20 percent time, one structure for commissioned work (exploitation) and another for NCW (exploration). Here the choice between alignment-orientated and adaptation-orientated activities is made by the practice and not by the employees themselves in contrary to contextual ambidexterity. Key success factors for adaptability are more autonomy, flexibility and risk taking and less formal systems and control (O’Reilly & Tushman, 2008). Autonomy and risk taking are confirmed constructs for creativity by Burkus & Oster (2012).
3.2 Creativity
Employees’ or individuals’ creativity is the production of novel and useful ideas (Amabile, 1983). Both novelty and usefulness are necessary conditions for an idea to be considered creative (Zhou, 1998). In the case of NCW practices the definition of e.g. Zhou & George (2001) is more applicable: creativity is the production of novel and useful ideas, processes, or products by a person or group. Because in this research the focus is on individuals’ creativity, ‘group’ will be extracted from the definition. Based on the literature (Amabile, 1988; Zhou, 1998; Shin & Zhou, 2003; Oldham et al., 2004) individuals’ creativity for this research is defined as:
16 “The generation of new and useful ideas concerning products, services, processes, and
procedures in organizations”.
In business organizations individuals’ creativity is also present and is often the building block for organizational innovation (Amabile, 1988). Previous research examined affect and creativity in work organization (George & Zhou, 2002; Madjar, Oldham, and Pratt, 2002; cited in Amabile et al., 2005, p.395). One of the researches is by Gumusluogo & Ilsev (2007) who investigated the relationship between creativity with organizational innovation in a study with a sample of 163 employees and their leaders in 43 Turkish entrepreneurial software development organizations. Unfortunately this relationship couldn’t be supported by their data because creativity does not have a significant relationship with organizational innovation.
Amabile (1996; 1998) argues that there are three components of creativity within every individual: expertise, creative-thinking skills, and motivation. Expertise is considered as knowledge: technical, procedural, and intellectual of nature. Creative-thinking skills determine how flexibly and imaginatively people approach problems (Amabile, 1996). The last component is motivation and it comes in two forms; intrinsic - and extrinsic motivation, whereas intrinsic motivation is considered as one of the most important and powerful influences on individuals’ creativity (Amabile et al., 1996; Amabile, 1998). In this research it is argued that NCW time positively relates to individuals’ creativity mediated by intrinsic motivation, autonomy, employees’ willingness to take risks and encouragement by supervisor(s) and manager(s). First the theory regarding intrinsic motivation will be elaborated.
3.3 Intrinsic Motivation
Motivated means to be moved to do something; being in a motivational state. When is an individual motivated or unmotivated? An unmotivated individual is regarded as someone who feels no impetus or inspiration to act, whereas a motivated individual is someone who is energized, desired, or activated toward an end (Ryan & Deci, 2000). Intrinsic motivation is driven by curiosity, enjoyment, interest, satisfaction, and challenge of the work itself for its own sake and can be most immediately influenced by the work environment (Deci & Ryan, 1985; Amabile, 1996; 1998; Ryan & Deci, 2000). Individuals who want to establish a higher level of intrinsic motivation have to experience satisfaction of the needs both for competence and autonomy (Ryan & Deci, 2000). On the contrary “extrinsic motivation is driven by the desire to attain some goal that is apart from the work itself” (Amabile, 1996, p. 7) and is most
17 often combined with external rewards, such as money. Money doesn’t necessarily make employees more passionate about their jobs or tasks, because it can even give them a feeling of being controlled or bribed (Amabile, 1998). Levels of autonomy can reflect external control or self-regulation. In both motivations autonomy is relevant (Ryan & Deci, 2000).
When employees are working on projects they are passionate about during their NCW time, it is reasonable to assume that they are intrinsically motivated. Therefore the salience of compensation, bonuses or other extrinsic rewards should be reduced during NCW time (Burkus & Oster, 2012). Most of the NCW practices elaborated in the cases chapter do not reward their employees with money or equity (in the new project). However, three categories can be made: no compensation, tangible – and nontangible individual’s incentive compensation (Pink, 2015). Whereas the latter mentioned can consist of recognition by others and the company what might derive in promotion. As a possible result the employee proved to be a more complete employee in the company and puts itself on the map internally.
Owing the fact that not all researched companies are rewarding their employees for their projects developed during NCW time and reward salience has been neglected in the research. Therefore, only intrinsic motivation will be assessed as a positive relationship to employees’ creativity. Extrinsic motivation can sometimes conflict with intrinsic motivation (Bénabou & Tirole, 2003) and can undermine intrinsic motivation (Ryan & Deci, 2000) but it does not necessarily inhibit creativity (Amabile, 1996). Amabile (1996, p. 7) states that findings in previous studies showed that “primarily intrinsic motivation will be more conducive to creativity than a primarily extrinsic motivation”, but if initial levels of intrinsic motivation are high, enabling extrinsic motivation can conducive (Dewett, 2007).
Concerning appropriate awards for employees’ actions a balance needs to be constructed between tangible and non-tangible rewards. When actions are tied to bonuses creative behavior and the exploration of new ideas are undermined caused by the fear to take to big risks and face a higher chance on failure (Amabile, 1998). In contrast, when there is no recognition or (verbal) reward for creative efforts, employees could experience a feeling that creativity is not valued by the organization. Yet, when initial levels of intrinsic motivation are already strong “rewards can actually enhance intrinsic motivation and creativity when they confirm competence, provide useful information in a supportive way, or enable people to do something that they were already intrinsically motivated to do” (Hennessey & Amabile, 2010, p. 581). Yet, rewards appear to undermine intrinsic motivation and creativity caused by undermining of their self-determination, because they feel controlled (Ryan & Deci, 2000). Whereas self-determination, which is related to intrinsic motivation, refers to “an individuals’
18 perception that he or she is the driving force behind successful performance of the task” (Zhou, 1998, p.263). Self-determination together with perceived competence are the two psychological antecedents of intrinsic motivation supposed by the Cognitive Evaluation Theory (CET) (Deci & Ryan, 1985; Zhou, 1998). Perceived competence refers to “an individual’s belief that he or she is capable of doing a task” (Zhou, 1998, p. 263). Feelings of competence can enhance intrinsic motivation for an action because he or she feels able to do the task well and satisfaction for competence is achieved. A combination of satisfaction of competence and autonomy lead to a high level of intrinsic motivation (Ryan & Deci, 2000). The interviews with the contact persons of the cases indicated that compensation is not at place. At Atlassian they reward the initiator(s) of a project or product monetary, whereas at XL Team, the manager of the NCW project can receive a share of equity in the product. However, they state that this shouldn’t be the reason why to participate in the NCW practice. Internal recognition in the company is an often mentioned form of ‘reward’.
Many studies have noted the important role of intrinsic motivation, in applied settings the construct is hardly ever actually measured (Dewett, 2007). However, there are five studies which provide the findings of the contrary: Koestner et al., 1984; Tierney et al., 1999; Ryan & Deci, 2000; Zhang & Bartol, 2010; Shin & Zhou, 2003. All the studies present a positive relationship between these constructs. Koestner et al. (1984) showed that participants (total of 44) who had presented high intrinsic motivation produced more creative paintings.
To verify these results and to test whether this relationship also accounts when intrinsic motivation derives from a NCW practice the first hypothesis for this research is proposed as:
Hypothesis 1: NCW practices are positively related to intrinsic motivation, which is positively related to individuals’ creativity.
3.4 Autonomy
The level of employees’ individual autonomy can have a positive relationship with the previously described intrinsically motivation; when facing a higher level of autonomy it is possible that the employee is in such a degree free to be able to pursue his or her ideas for which the person is intrinsically motivated. Autonomy can be described as “the degree an employee is given substantial freedom, discretion and independence to decide what specific procedures should be used to carry out a particular task” (Hackman & Oldham, 1975; cited in Dewett, 2007, p.200). In this research autonomy is defined as the extent to which employees are free to carry out their tasks without excessive supervision (Basu & Green, 1997). The task in dispute is the project employees spend working time on. In different forms of NCW
19 practices different levels of autonomy are present; the freedom they have choosing their project, company related yes or no, when spending time on it, and so forth. Deci & Ryan (1987) state that events that are controlled negatively affect creativity, whereas events that are more autonomy supportive are promoting creativity. NCW will increase the level of autonomy the employees are experiencing during the execution of the practice; the employees are in certain degree (depending on the practice) free to decide which projects to work on, how and when. During a NCW practice a signal to the employees is that they have the right to allocate time for their desired projects or unassigned tasks of which they think are best for the organization.
During work on projects employees can work independent of other employees or in teams, in these situations different levels of autonomy will occur. A right balance has to be found between individual and team autonomy because these might conflict and reduce effectiveness of teams (Moe et al., 2012). Individual autonomy has been identified as an important intrinsic motivator (Gagne & Deci, 2005; Osterloh & Frey, 2000; Foss et al., 2007; cited in Moe et al., 2012, p. 53). Moreover, giving the employees the freedom to work independently may backfire to the organization in a scenario in which employees don’t effectively make use of the opportunity or even worse use organizations’ assets for personal gain (Moe et al., 2012). De Jong & Kemp (2003) discovered that perceptions of autonomy have a positive effect on the innovative behavior of individual co-workers and that excessive standardization impedes innovation. They state that autonomy is related to standardization, which “is the degree to which an organization’s work processes are established with rules and procedures” (Bodewes, 2000; cited in De Jong & Kemp, 2003, p.193). These findings are in line with previous research which showed that employees more likely to innovate in situation where they have sufficient autonomy and control over their work (projects), which can promote greater effectiveness in organizational functioning (Nicholson & West, 1988; West, 1987; cited in West & Altink, 2008). In organizations the moment of supervision and approval is necessary to select, filter, continue or stop projects and differs between practices. This is described in the selection criteria of each of the practices in the cases chapter. In order to increase individuals’ creativity a higher level of autonomy during the execution of the NCW practice is needed. To verify that autonomy has a positive effect on individuals’ creativity and to test whether this positive effect derives from a positive relationship between a NCW practice and autonomy the second hypothesis of this research is proposed as:
20 Hypothesis 2: NCW practices are positively related to autonomy, which is positively related
to individuals’ creativity.
3.5 Encouragement by supervisor(s) and manager(s)
Support and encouragement by (people in the) organizations are facilitating conditions to spur creativity. Unfortunately, creativity gets killed much more often than it gets supported. In this situation managers play an important role (Amabile, 1998). They can have an influence on all the three components of creativity, but expertise and creative-thinking skills are more difficult, expensive and time consuming to influence than motivation (Amabile, 1998). Based on more than two decades of research she has defined six categories for managerial practices that affect creativity: challenge, freedom, resources, work-group features, supervisory encouragement, and organizational support. In the case of NCW practices the categories supervisory encouragement and organizational support are vital constructs and therefore incorporated in the conceptual model as encouragement by manager(s) and supervisor(s). Freedom is housed under autonomy whereas resources belong to the approval stage of the projects.
Previous research on organizational encouragement has demonstrated that employees are more likely to produce unusual, useful ideas if they are given license to do so (Amabile et al., 1996) through communications or instructions (Parnes, 1964; Parnes & Meadow, 1959; cited in Dewett, 2006, p. 32). Giving instructions is a role of the manager(s) or supervisor(s) to create goal clarity (Amabile et al., 1996). Supportive evaluation of ideas and projects with supervisor(s) and/or manager(s) is an aspect that can enhance intrinsic motivation which is conducive to creativity (Cummings, 1965; Kanter, 1983; cited in Amabile et al., 1996, p. 1160). Besides the affect it has on creativity it also accounts for the encouragement of willingness to take risks (Amabile, 1998). This is in line with the findings by Amabile et al. (1996) which also state that encouragement is a facilitating construct for creativity. In the perspective of the NCW practices the attitude of managers can be a reason for success or failure of practices (Birkinshaw, 2014). They have to allow several antecedents compared to commissioned work to enhance creativity: increased autonomy, reduced salience of extrinsic rewards, and encourage employees to take risks (Burkus & Oster, 2012). The role of management will change as a result of NCW practices. Depending on the NCW practice employees do not always need permission to generate new ideas or projects in the early stages during NCW; however, they may still provide feedback. The freedom employees have and the process of feedback differs between the organizations. This will be shown in the cases
21 chapter. It can enhance intrinsic motivation of individuals (Ryan & Deci, 2000), yet no clear effect of feedback on creativity is established (Zhou, 1998). However, Deci (1971) found a positive effect of feedback on intrinsic motivation when teams are given unexpected positive and informal feedback.
In the research of Ryan & Deci (2000) three kinds of feedback are present; positive -, negative - and no feedback. Zhou (1998) made a distinction between feedback valence and feedback style to exam the possible interactions to affect creative performance. A commonly used type of feedback is competence feedback, “which is the information provided by others, such as supervisors, managers and coworkers, regarding the extent to which the ideas or solutions generated by an individual are creative, relative to normative or situational criteria” (Zhou, 1998, p.262). Feedback valence is defined as the positive or negative outcome of the comparison between an individuals’ creative performance and situational criteria. Feedback should be positive, which means clearly indication of the strengths or points of improvements. Only noticing what is wrong is not helpful for the employee. “Positive feedback valence signals that the individual’s ideas are more creative than the criteria; negative valence indicates that the ideas are less creative than the criteria” (Zhou, 1998, p. 262). The feedback style refers to the manner in which competence feedback is delivered. A distinction can be made between two styles: informational and controlling. The informational feedback style can be interpreted as constructive, informative, understanding and supportive and gives the recipient the feeling he or she is in control of his or her own actions and behavior. On the other hand the controlling feedback style can be interpreted as inhibiting and restraining, caused by desirable outcomes that have to be achieved and levels of creativity (Zhou, 1998). The study of Zhou (1998) showed that when individuals received positive feedback in combination with an informational style condition, their creative performance can be enhanced. Negative criticism can even undermine intrinsic motivation necessary for creativity (Amabile et al., 1996). Yet, before the survey was rolled out it was not known whether the selected NCW practices incorporated moments of feedback and by whom. This in combination with the knowledge that a longer survey could lead to higher rate of non-response (Fan & Yan, 2010), the choice has been made to leave feedback out of the empirical research.
Besides providing feedback to employees during the execution of the practice managers have to supervise ideas and take on the responsibility for the practice. Eventually the ideas or projects of the employees need to be reviewed by them to give them approval for the next steps, such as extra time and resources to elaborate on those new ideas or projects
22 (Burkus & Oster, 2012). Apart from positive and informational feedback there are other actions to promote feelings of self-determination and personal initiative to eventually contribute to more creative outcomes, namely: “when supervisors are supportive, they show concern to employees’ feelings and needs, encourage them to voice their own concerns, provide positive and informational feedback, and facilitate skill development among employees” (Ferguson, 2009, p. 425). To verify the positive relationship between encouragement by supervisors and managers, and individuals’ creativity and to test whether a NCW practice is also positively contributing to this relationship the following hypothesis is proposed:
Hypothesis 3: NCW practices are positively related to encouragement by supervisors and managers, which is positively related to individuals’ creativity.
3.6 Willingness to take risks
As mentioned in the previous paragraph, Amabile (1998) stated that support by supervisor(s) and/or manager(s) also have an effect on the encouragement of willingness to take risks. Whereas, the willingness to take risks can be related to the guidelines of the practice, personal traits and if failure is allowed. Risk can be defined as uncertainty about whether potentially significant and/or disappointing outcomes of decisions will be realized (Sitkin & Pablo, 1992). In the case of creativity risk can come along with high uncertainty (Sethia, 1989). The willingness to take risks is defined as “willingness to engage potential risks at work in an effort to produce positive organizationally relevant outcomes such that one is open to the possibility of negative personal outcomes as a result” (Dewett, 2006, p. 28). Fitzgerald (1990) argues that both encouragement of risk taking and authorizing failures helps to spur creativity. Therefore, it is possible that there exist a relationship between encouragement by supervisor(s) and manager(s) and the willingness to take risks. Dewett (2006) has proved both that encouragement is significantly positively associated with the willingness to take risks and that willingness to take risks mediates the effect of encouragement on individuals’ creativity. Employees might experience an increase in comfort with taking more risk as a result (Kahn, 1990).
Individuals participating in a NCW practice might face mitigated risks by being creative; there is not necessary failure or negative consequences for employees, whereas being creative in the core businesses of the organizations is related with higher risks because of the potential negatively outcomes it might have. Due to the NCW practice employees’
23 willingness to take risks might increases (Burkus & Oster, 2012). When employees are faced with uncertainty, many of them experience a subtle bias against proposing their creative ideas (Mueller et al., 2011). NCW practices might be the solution for this bias by suspending risks. Willingness to take risks mediates the relationship between intrinsic motivation and creative outcomes (Dewett, 2007). Dewett (2006) stated that the willingness to take risks is positively associated with employee creativity. This result was based on a questionnaire administered to 1164 employees of a research and development firm headquartered in the Southwest United States. The overall response rate was 24%, so this result was based on 287 usable questionnaires. Yet, the construct is rarely measured. Additionally Dewett (in press; cited in Dewett, 2007, p. 199) found that that an employee’s willingness to take risks mediates the influence of supervisor encouragement for creativity and employee creative performance.
When employees or managers do get awarded for the success of their project, most often they choose for a less risky project with a higher chance of success (Jensen, 2001). However, these projects are most often incremental or simple adjustments to existing products instead of radical or breakthrough new projects. When the employees feel their job position is threatened, risk taking will be avoided. They will choose the safe route what can have consequences to innovation (Ford & Gioia, 1995).
A distinction of two types of willingness to take risks can be made. The first is for the employees regarding the choice of their ideas. This can be influenced by management and supervisors based on encouragement or discouragement. The second type of risk taking is for the supervisors and/or managers whether they decide to give a go or a kill for projects (Cooper, 2008) and appoint extra time and resources to the approved ideas. The second type is not included in the research because the willingness to take risks of the employees is measured and related to creativity. Regarding the first type of willingness to take risks a relationship with encouragement by supervisor(s) might exist and is therefore addressed in this study. As described by Amabile et al. (1996) encouragement is a facilitating construct for creativity. Dewett (2006) proved that autonomy is positively associated with the willingness to take risks. Yet, he didn’t found that willingness to take risks mediates the effect of autonomy on individuals’ creativity. To verify that the willingness to take risks has a positive effect on individuals’ creativity as proved by previous research and to test whether this positive effect derives from a positive relationship between a NCW practice and the willingness to take risks, hypothesis 4 is proposed as:
24 Hypothesis 4: NCW practices are positively related to the willingness to take risks, which is
positively related to individuals’ creativity.
3.7 Groups in NCW practices
It might be possible that there is a difference between the problem specific NCW practices and the ‘normal’ NCW practices. Based on the literature regarding autonomy (eg. Deci & Ryan, 1987), it can be expected that a NCW practice with more restrictions regarding the choice of ideas and projects, would lead to a lower level of autonomy and therefore a lower level of individuals’ creativity. The employees can feel controlled in these events. Also intrinsic motivation can be lower if the participant is less interested in the specific problem statement (e.g. Deci & Ryan, 1985). The case descriptions showed that Transavia’s NCW practice is problem specific whereas the other companies execute NCW practices where employees are free to work on any kinds of projects as long as they are company related. Therefore the fifth hypothesis is proposed as:
Hypothesis 5: Individuals’ creativity is lower in organizations where the projects of the employees have to be related to specific problems than in organizations where the employees
are completely free to work on any project.
Based on the assumption that the four constructs are present in NCW practices and the proved theory that these four constructs are positively related to individuals’ creativity, the research question is formulated in a hypothesis. Therefore it is expected that employees experience a higher level of individual creativity when participating in a NCW practice, compared to the employees that don’t participate in a NCW practice and only experience their daily tasks related to the core business. Therefore hypothesis 6 is proposed as:
Hypothesis 6: Employees experience a significant higher level of individual creativity when participating in a NCW practice than the employees who don’t participate in a NCW practice.
3.8 Conceptual Model
Scholarly literature has largely ignored the practice of NCW time. Only a few organizations presented to the rest of the world that they are or were executing a NCW practice. As described in the paragraph 2.1 there are two types of implementations of NCW practices and different variants within these types. This research continues to further build the foundations
25 created by Burkus & Oster (2012), which consist of definitions and a proposed model for additional research.
Figure 1: Proposed Model of Non-commissioned Work Time (Burkus & Oster, 2012)
In their model the three constructs that might have an influence on individuals’ creativity are: autonomy, reward salience and willingness to take risks. The authors based their propositions on existing scholarly literature. Their propositions are displayed on the right side of the model where a plus proposes that NCW will be positively related to the construct which is positively related to individual creativity and vice versa for the minus. Yet, there is no empirical
evidence confirming these effects that arise from NCW time and the mutual relationships between the constructs has been disregarded.
Based on the theoretical framework and propositions the conceptual model of this research is build, which is illustrated in figure 2. Reward salience has been changed to the construct intrinsic motivation and encouragement of supervisor(s) and manager(s) has been added. The reason for this addition is that supervisor(s) and manager(s) could play an important role during the execution of a NCW practice that might lead to a higher level of individuals’ creativity. As can be seen in the (right side of the) model only positive relationships are expected. These findings are first verified in the results chapter after analyzing the data. The conceptual model contains four mediating variables to test for a
26 positive effect of the NCW practices on individuals’ creativity, indirectly through the selected constructs. In the next chapter the methodology for this research is elaborated.
Figure 2: Conceptual Model
4. Cases
As stated in chapter 2, management innovations can bring a competitive advantage that is difficult to imitate by others (Mol & Birkinshaw, 2006). This chapter will show whether this is the fact and provide deeper insights in these NCW practices.
*Due to confidentially of one of the companies, one case description is not included in the final version. This company is named Company X in this research.
4.1 Atlassian - ShipIt Days
Atlassian is an Australian software company that was founded in 2002. It employs over 1,100 employees in eight offices spread worldwide. In order to foster creativity within the company they established their initial ‘FedEx Days’ what has been renamed to ‘ShipIt Days’ nowadays
27 (Atlassian, 2015). The Fedex Day name was used to express the message of the practice that employees had to deliver something overnight and within 24 hours during the hackathon (Moe et al., 2012). The idea of the FedEx Days derived from the notion that most ideas, products and inventions originate when people are together and brainstorm. This is a setting Atlassian wants to create. The ShipIt Day is held once every three months where every employee can work on what he or she wants without supervision, as long it related to the company somehow. An example of an idea developed during the ShipIt Days at the Amsterdam headquarters was an automated system to keep record of the scores of games of ping pong. This will not contribute to an additional revenue stream but it does contribute to the positive atmosphere and fun within the company. These are the main drivers of the ShipIt
Days (Koudiss, 2014).
Selection procedure
There is no selection of ideas beforehand. There are two brownbake sessions as preparation for the ShipIt Days which are held during lunchtime. These sessions are mending to discuss potential project ideas and form teams if necessary (Koudiss, 2014). Lots of ideas derived from something about products that has been bothering employees or some new feature where normally no time for is to develop and rethink (Moe et al., 2012).
Participants are not only developers but every employee who has approval is allowed to participate with all kinds of ideas. Most employees within Atlassian have a pretty flexible working schema, but not all of them. For some employees it is harder to be able to participate because they are tight to a fixed working schema and have to be available for customers and clients (during office hours), such as customer service teams. They are depending of enough coverage of colleagues and their management. The only selection criterion is that you need to have approval. A requisite is that you are able to present and demonstrate something after 24 hours (Koudiss, 2014).
In fact, the first selection procedure is at the end of the 24 hours when a team of managers reviews the developed ideas. From there most often the manager decides whether to pursue the project, allocate time and resources, and eventually make projects production-ready because of the small nature of the projects. Anass Koudiss gave his idea as an example that it doesn’t have to be developer related. His idea was translating promotion/marketing movies of Atlassian to the languages of the non-English speaking countries and normally would see the English versions. These translation can be done with the use of Atlassians own resources. Eventually he had only time to do one translation during the ShipIt Days. However,
28 his manager liked the idea so he received budget to outsource the remaining translations by a language office (Koudiss, 2014).
Investment
The costs for the ShipIt days are in fact one and a half working day (in three months) for each employee participating and small costs like food and drinks. However Atlassian hopes that the outcomes of the ShipIt days outweigh the cost, yet there are no targets of revenue that should derive from it. Outcomes are most often solutions to internal problems, development of new products but also better synergy within the company and having fun together. Huge breakthroughs haven’t yet been developed during these days (Koudiss, 2014).
Rewarding
If employees develop an idea of which the reviewers of the pitch or the management team are enthusiastic about, there is the opportunity to continue the development besides their core businesses. Depending of the urgency of the project the manager can pursue it. The products that derive from this practice are 100 percent ownership of Atlassian. Though, the initiator of a successful product is getting both rewarded in a monetary way as in career opportunities. However, it shouldn’t be forgotten that a whole team with different skillsets is needed to in the process, so eventually the new products jointly products (Koudiss, 2014).
Encouragement
Two reasons for encouragement are mentioned at Atlassian. The first is to boost creativity whereas the second is to see it as an opportunity to work on ideas and projects for which normally no working time is available for. With the brownbake sessions awareness for the next ShipIt is created to involve more employees (Koudiss, 2014).
4.2 Transavia – Lean Startup Team
Transavia is a Dutch low-cost airline and operates as an independent part of the AIR FRANCE KLM group. It offers charter flights and scheduled flights to summer and winter holiday destinations around Europe and to the Mediterranean. Transavia employs over 10,000 employees (Transavia, 2015).
For a company such as Transavia, customer experience and customer relationships have high priority. Therefore they initiated their NCW practice in June 2014 and it’s in line with the strategic plans of the organization. A part of their strategy is the customer strategy
29 which is translated to the so called ‘Passenger Experience Index’ (PEI). Both the customer- and employee strategy are improving hand in hand. The practice not only implies developing new products but is also meant to accelerate organizational changes. The idea for the practice originated as a consequence of the lean startup method by Eric Ries. Co-creation and innovation are the central themes of the practice.
Currently, the lean startup team consists of 14 employees and is formed in order to tackle specific customer related problems or touch points. An example of such a touch point was to create a memorable experience for customers during the flight. The team gathers every Thursday for six hours to divide their time and insights to find proper solutions for these problems or touch points. During these days the employees of the team are free in their choice of solutions on how to tackle the problems or strategic touch points. Their solutions are allowed to be very diverse. A product that derived from the practice is a combination of an event planner (‘Datumprikker’) and a flight schedule: ‘Vluchtprikker’. The product is a solution for the problems that come along when groups want to fly together.
Besides the six hours the team uses the remaining hours for ‘speed dates’ with other colleagues, and meetings with suppliers and other involved parties. The team members have to combine their core businesses tasks with the innovation team; skipping the team sessions is not possible. They all expressed commitment to the rest of the team and have to take their responsibilities seriously. One of the biggest challenges for them is the process of working together (Noordeloos, 2015).
Selection Criteria
Firstly, employees have to be selected for the innovation team of Transavia. The manager of the practice choses who he wants in his team. An important aspect of the team is assembling multiple skillsets besides that there needs to be a balance between innovators and implementers. The selection of members will be on a yearly cycle. Yet, there will be a transfer program of members. Some will leave whereas others will stay in the team in order to prevent a complete reorganisation.
The self-regulated team is confronted with problems or touch points for which they have to find solutions, which are most often customer related. After employees have created a unique solution it has to pitched for the senior management team to get approval for their project to continue. An important criterion for them regarding implementation is whether the project can be up scaled throughout the whole organization. Teams within the innovation team are formed to simultaneously develop three Minimum Viable Products (depending on
30 the stadium of development). Because every member has the same knowledge about the process they can always switch to, and assist, other teams on the level of process thinking. Supervision over the teams and projects is limited, only to lead in the right direction. Every Minimal Viable Product has a lead team member. He or she is responsible for the allocation of resources that are needed to conduct the next steps in the development process. The steps in the development process follow at a rapid pace, preferably by weekly development sprints. These sprints can be conducted by external parties but are still under close supervision of the teams. The team is responsible until the prototype has been realized. If the prototype will be implemented in the organization they take a consulting role during the business implementation process (Noordeloos, 2015).
Rewarding
Transavia offers no monetary reward for the team members. However there are three kinds of ‘rewarding’. Firstly, that it is fun and instructive for the members. Secondly, that they are seen as innovators within the organization. The last rewarding is that participation has an effect on the employees’ final evaluation. All the products that derive from this practice are ownership of Transavia. However, it might be possible that external parties or partners get a share in the ownership of the Transavia products. For example in case of co-creation projects (Noordeloos, 2015).
Investment
Before the innovation team started with the expedition, they had to attend a bootcamp to educate and make them familiar with the lean startup methodology. These bootcamps consisted of six half days sessions. Regarding the employees, Transavia invested in these bootcamp sessions. Besides the investment that the team members have one day less in the week to spend on their core businesses, Transavia has to invest in external parties during the entire process. Most often external parties are needed at the stage of the prototype development and afterwards. Therefore Transavia needs to financially invest in these parties. They prefer parties that are able to test the prototype as cheap and quick as possible. One of the reasons is that prototypes that do not fulfil the needs can be disposed after testing (Noordeloos, 2015).
31 4.3 XL Team – Pay and play days
XL Team (founded in 2011) is an independent IT services group with more than 50 software developers based in Amsterdam (headquarter), Bucharest and San Francisco. They have been delivering professional services, customize software solutions and dedicated resources to their clients which include e.g. Ahold, ABN Amro, Rabobank and Microsoft (XL Team, 2015). Their NCW practice is to date only executed in Romania, therefore the interviewee was a partner of XL Team based in Bucharest.
Their organizational practice that enables employees to develop their own ideas, is performed in the XL Playground and is called ‘pay and play days’ and was introduced in May 2014. This name derives from the initiative that employees in the practice are allowed to play on Friday and pay on Saturday. The Friday is an investment of XL Team whereas the Saturday is an investment in time of the participant. The partners of XL Team think that the power of innovation is not just in the hands of a few persons but it can be in the power of others who may not have management positions. So the hard working developers can be an idea generator in the end. This vision derived from Google’s 20 percent time and was suggested by two employees. The XL Playground makes sure that the company is able to innovate and is able to let others to propose their ideas. At the same time they need to have employees on the production line for outsourcing projects which in the end pay the bills. Currently, XL Team has one product that is still in the XL Playground and up till now no product has been able to create a new revenue stream (Cobalas, 2014).
XL Team is a company doing software outsourcing services and is constantly busy with projects of their clients. So they mainly execute projects of others instead of developing their own products and create a reputable name as a software developer. Within 7 to 10 years they expect that outsourcing will hardly be done in Eastern Europe because the prices of IT development will be aligned with those in the rest of Europe. As a consequence a shift will occur to the East. With the XL Playground they hope to create products that will cause brand awareness. As for the employees they want to utilize the brains of their developers, allow them to create own ideas, and tackle problems from different perspectives. For the employees trying out, failing and learning are the main teachable moment (Cobalas, 2014).
Selection Criteria
Before employees are allowed to participate in the XL Playground there are several criteria which the employee and idea must meet. The first criterion is that you have to work for XL Team for at least 9 months. The second criterion is that XL Team has to be able to cover the
32 technical part of the idea. The pitch of the idea is the next step. The ’pitch’ can be done very informal and in any form such as a PowerPoint presentation, mail, but ideally in an A4 page explaining the idea. Thereafter the application has to be approved by the partners whether the idea will get into XL Playground where the prototyping phase is at place. When an idea is in the XL Playground, 1 month (4 Fridays and 4 Saturdays) will be allocated for the development of a Minimum Viable Product in the form of wireframes or mock-ups and validated by potential users. Based on the MVP and team feedback, the partners decide whether to continue the idea. As a consequence a Letter of Intent is compiled which shall states what happens with the idea after certain milestones are met. Hereafter a time limit will be defined for the validation phase. The validation phase consists of a first version of the beta product on the market, such as the Androids Playground. Reviews and feedback are gathered to adjust and improve the product (Cobalas, 2014).
Investment
There is no financial investor behind the Playground, so it is all financed with own capital. Therefore the company is careful with all the resources they have before allocating projects to the Playground and to minimize risks with projects. Because it is a small company they have to be cautious with their resources. By the end of 2016 they hope to generate 80% of their revenues by own products (Cobalas, 2014).
Rewarding
Both XL Team and the employee(s) are co-owners of the product. Depending on the resources that need to be allocated the negotiation part of the equity starts. XL Team finds it important to give the employee(s) a fair share of equity to reward them and keep them committed. Major decisions will be taken in good consultation with all the stakeholders; partners and the employee(s). The main thought of the partners is to continue with the vision of the employee(s) (Cobalas, 2014).
Encouragement
Within the company the employees are encouraged to think big and to applicate their ideas. However they tell employees to think within the scope of the company and what they are able to make with their own resources. An example is two employees who presented their idea for a gaming app. The partners liked the idea but XL Team doesn’t have the developers for such technologies they had to reject the idea. In a case where the pursue the idea they had to hire
