Stimulating the innovative capacity of an individual employee
FERDY HOEKMAN Studentnumber : 1334670
Univer sity of Gr oningen
MscBA Change Management, Faculty of Management and Or ganisation Lijster 8 8281 GR Genemuiden tel.: 0627575786 email: F_hoekman@hotmail.com Faculty super visor s: Dr . B.J .M. Emans Dr . J .F.J . Vos Company Super visor ABN AMRO Ver zeker ingen
Mevr . ir . P. van der Zee Or ganisatie adviseur
ABSTRACT
An extensive literature study was conducted, which identified 15 factors that all have an impact on the innovative capacity of an individual. In a case study at ABN AMRO Verzekeringen 26 interviews were held to reveal possible effects of the identified factors.
Based on this set of factors a number of questions are addressed:
· To what extent does the presence or absence of each factor in an organisation play a role in stimulating the innovative capacity of an employee?
· How is it that these factors do have an effect on the innovative capacity of an employee?
· To what extent does the management of ABN AMRO Verzekeringen stimulate the innovative capacity of their employees?
Eight out of the fifteen factors do appear to have a very strong effect. These are seen as ‘critical factors’ in the process of increasing the innovative capacity.
TABLE OF CONTENTS
ABSTRACT 2
TABLE OF CONTENTS 3
1. INTRODUCTION 4
2. THEORECTICAL FRAMEWORK 7
2.1 Factors which stimulate innovation at the level of the individual employee 7
2.2Creating an organisational surrounding that stimulates innovation 9 3. RESEARCH METHOD 16 3.1 Procedures 16 3.2 Respondents 17 3.3 Dataanalysis 17 4. RESULTS 18
1. INTRODUCTION
‘Innovation has nothing to do with how many R&D dollars you have…. it’s not about money. It’s about the people you have, how you’re led, and how much you get it.’
(Steve Jobs interview with Fortune Magazine, 1998)
In its broadest sense the term innovation comes from the Latin innovare, meaning ´to make something new´. To structure the concept, researchers differentiated different types of innovation. The most important typologies are product versus process innovation, and incremental versus radical innovation. Product innovation is defined as new products or services introduced to meet an external or market need. Process innovation is defined as new elements introduced in an organisation’s operations to produce a product or render a service (Ettlie, & Reza 1992; Knight, 1967; Utterback, & Abernathy, 1975). Product innovations are more focused on the external market and are primarily customer driven, while process innovations are more internally focused and are primarily efficiency driven (Utterback, & Abernathy, 1975).
A second distinction is incremental versus radical innovation. Incremental and radical refer to the different types of process innovations. Incremental innovations are minor improvements or simple adjustments in current processes (Munson, & Pelz, 1979), whereas radical innovations are fundamental changes which represent revolutionary changes in processes. However, both represent clear departures from existing practice (Dewar, & Dutton, 1986). The major difference between the two types is the degree of novel technological process content embodied in the innovation, and hence the degree of new knowledge embedded in the innovation.
This research focuses on stimulating the innovative capacity of an organisation/ABN AMRO Verzekeringen. For that reason, the definition of innovation provided by Van de Ven, Angle, & Poole (1989) is used; “Innovation is a process that involves the generation, adoption, implementation and incorporation of new ideas, practices or artefacts within an organisation”.
innovative potential would be enormous. Innovation management is not a matter of doing one or two things well, it is about good allround performance. (Tidd, Bessant, & Pavitt, 2005)
Although each individual may only be able to develop limited, incremental innovations, the sum of these efforts can have farreaching impacts. Therefore, stimulating the innovative capacity of an organisation starts with stimulating the innovative capacity of each individual in that organisation.
Increasingly innovation is becoming a corporatewide task, involving production, marketing, administration, purchasing, and many other functions.
For example Tidd et al. (2005: 485) mentions a reaction of a British manager; ‘Our operating costs are reducing year on year due to improved efficiencies. We have seen a 35% reduction in costs within two and a half years by improving quality. There is an average of 21 ideas per employee today compared to nil in 1990. Our people have accomplished this’.
The above mentioned approach towards innovation suits the direction wherein ABN AMRO Verzekeringen wants to develop. ABN AMRO Verzekeringen is a joint venture between ABN AMRO Bank (49% ownership) and Delta Lloyd Groep (51% ownership). ABN AMRO Verzekeringen works exclusively for ABN AMRO Bank. It operates on the business and private market in the Netherlands and offers life, indemnity, and healthcare insurances. ABN AMRO Verzekeringen sells these insurances through the banking offices of ABN AMRO Bank, through internet, and through the call centre of ABN AMRO Bank.
To gain a better insight in the situation at ABN AMRO Verzekeringen a preliminary research was conducted. This preliminary research partly based on the research of Tidd et all. (2005). consisted of a questionnaire (see Appendix A and B for content and results) and interviews with the management and employees of ABN AMRO Verzekeringen.
This research did reveal some bottlenecks, which were having a negative effect on the innovative capacity. The most important bottlenecks expressed by employees and managers are:
· The organisation lacks a culture that stimulates innovation.
· The organisation is too busy adapting to new legislation, there is little time for new ideas. · The time from idea to implementation is too long.
· The organisational surrounding and communication between departments does create too many barriers that diminish the timeliness.
· The support for innovation between departments is insufficient.
· The organisational culture and way of managing is conservative and stimulates innovation inadequately.
· Entrepreneurship of employees is not stimulated.
· Little action has been taken with respect to expressed ideas from employees. Moreover, actual action took a lot of time. When going through this process several times, employees get reluctant with putting their opinion forward, and create a feeling of “never mind”.
The bottlenecks presented above are input for a more thorough research at ABN AMRO Verzekeringen, with the ultimate aim of getting insight in how to stimulate the innovative capacity of ABN AMRO Verzekeringen.
This research is based on fifteen factors, to be dealt with in detail in the next section, which do appear to have an effect on the innovative capacity of an organisation. Three research questions are addressed in this thesis:
1) To what extent does the presence or absence of each factor in an organisation play a role in stimulating the innovative capacity of an employee?
2) How is it that these factors do have an effect on the innovative capacity of an employee? 3) To what extent does the management of ABN AMRO Verzekeringen stimulate the
2. THEORETICAL FRAMEWORK OF INNOVATIVE CAPACITY STIMULATION
According to Argyris (1965) innovation begins at the level of the individual employee. He states that when employees do not express their ideas, the innovative capacity of an organisation is down to a minimum. Therefore, increasing the innovative capacity of an organisation starts with stimulating the individual employee to express his or her ideas. This can result in many small ideas from employees acting as experts in their field, which combined can result in an increase in the efficiency and effectiveness of the organisation (Argyris, 1965). As Argyris (1965) mentions in his book, the lower one goes down in the organisation, the greater the possibility that behaviour is controlled by systems of technology, organisational structure, and managerial controls. Consequently, changing these controls into being more innovation stimulative would stimulate employees to be more innovative.
This chapter explains factors which stimulate innovative behaviour of employees, and subsequently explains how an organisational surrounding can be created, in order to stimulate and support these factors.
2.1 Factor s which stimulate innovation at the level of the individual employee
As mentioned, innovation starts at the level of the individual employee. They are in the position to see where improvements can be made and opportunities seized. Research conducted by Axtell, Holman, Unsworth, Wall, & Waterson (2000) and Farr (1990) identified autonomy, feedback, ownership of problems and ideas, and task variety as factors that have an impact on innovation at employee level. These factors are also defined by Noe, Hollenbeck, Gerhart, & Wright (2003). Their relevance will be explained in more detail below.
The factor autonomy is defined as the degree wherein a job allows an individual to decide about the way work will be carried out. Autonomy to decide about the work will encourage an individual to think about the way he or she is doing his job, and ways wherein he or she can increase his effectiveness.
In addition to autonomy, feedback is also a factor which has an impact on the innovative capacity of an individual. Feedback is defined as the extent to which an individual receives clear information about the effectiveness of his performance from the work itself, peers and/or superiors. When giving an employee insight in how he performs it is important for him to receive feedback from superiors, peers or the work itself.
Placing individuals in direct personal confrontation with the sources of organisational problems and opportunities is necessary for reaching the threshold of concern and appreciation to motivate most individuals to act. Besides, it reduces the occurrence of communication gaps in the organisation (Van de Ven, 1980).
Another factor that has an impact is task variety. Studies on job characteristics suggest that when employees engage in a wide variety of tasks, they are more likely to make suggestions on how to improve their work (Axtell et al., 2000). For that reason, a wide variety of tasks is also a factor that has an impact on the innovativeness of employees. Task variety is defined as the variety of duties, tasks and activities an employee has in his job. When having more variety in their tasks, employees can make a distinction between different activities, and see opportunities to improve them.
The above presented factors relate to the job an individual employee performs in an organisation. West & Farr (1990), King & Anderson (2002), and Rickards (1985) introduce creativity as an additional factor which relates more to the personal characteristics of an individual. Since creativity does relate more to the personal characteristics, it is relatively harder to influence than the factors mentioned earlier. However, this does not mean that creativity can not be stimulated.
Althoughcreativity is a factor which has an impact on the innovativeness of an individual, it will not be taken into account in this thesis, because creativity is used in a different stage in the process of becoming a more innovative organisation.
The factors in this thesis, when used properly, appear to stimulate an individual to use his innovative capacity for 100%. Creativity is a factor that can be used to increase the innovative capacity of an individual above that 100%, which is a next phase in the process of becoming a more innovative organisation. Moreover, in order to stimulate or enhance creativity, it needs a different approach than the other factors. (King & Anderson, 2002).
The above mentioned factors are a precondition for the factors that create an organisational surrounding which supports innovation.
2.2 Cr eating an or ganisational sur r ounding that suppor ts innovation
According to the researchers previously mentioned, one can state that in order to get the streams of ideas from employees flowing, and to keep it flowing in the future, requires an organisational surrounding that supports and stimulates the factors mentioned in paragraph 2.1. An ‘innovative organisation’ implies more than a structure alone: it is an integrated set of components which work together to create, and reinforce the kind of environment which enables innovation to flourish (Tidd et all., 2005). Angle (1989: 165) argues that “normal people have the capabilities and potential to be creative and innovative.” The realisation of this potential depends on whether management is able to motivate and enable individuals to innovate. This can be realised through a proper structured organisational surrounding Angle (1989). To create an organisational surrounding that has a positive effect on the innovative capacity, four components that are intertwined with the factors mentioned in the previous paragraph, are important. These four components are;
1) Management style. 2) Structure.
3) Culture.
4) Communication.
Each of these components will be discussed below, showing why they have a positive effect on the innovative capacity, and what the relationship is between them. Each of the factors that stimulate an individual to be more innovative can be gathered under one or more components. On the basis of these components several hypotheses are developed.
Also next to an innovation supportive management style does involving employees appear to be an important factor when stimulating the innovative capacity. There is a considerable amount of experience available which supports the view that enhanced performance can and does result from increasingemployee involvement in innovation (Tidd et al, 2005). Involvement in this perspective does also mean receiving feedback about the status of an idea, even if it is not implemented. A secondary effect which should not be underestimated is that when people are involved in change, they become more receptive to the change itself (West, 1990). West (1990) does also argue that the more people participate in decisionmaking through having influence, interacting, and sharing information, the more likely they are to invest in the outcomes of those decisions, and to offer ideas for new and improved ways of working. Vital is continuously stimulating employees to express their ideas (Tidd et al, 2005).
Another important factor, is participative safety. According to West (1990), participative safety is characterized as a single psychological construct wherein the contingencies are such that involvement in decisionmaking is motivated and reinforced, while occurring in an environment which is perceived as interpersonally nonthreatening. West (1990) argues, when employees experience an environment as nonthreatening and where failure is accepted, they are less reluctant to express their ideas.
As the preceding discussion suggests, these factors, either separately or taken together, do appear to have positive influences on the innovative capacity of an employee. This results in the following hypotheses:
H5. An innovation supportive management style has a positive effect on the innovative capacity of an individual.
H6. Involving an individual in innovation has a positive effect on his innovative capacity. H7. Participative safety has a positive effect on the innovative capacity of an individual.
Structure. The second component of an organisational surrounding which has an impact on the innovativeness of employees is structure. As Tidd et al. (2005) mention in their book, organisations that are hierarchical, using topdown communication and wherein little integration is between functions are unlikely to be very supportive of the smooth information flows and crossfunctional co operation, recognized as being important success factors of innovativeness. Tidd et al. (2005) give towards the form of communication in an organisation, which will be discussed further on in this chapter, great importance.
When looking back at the work of Axtell et al. (2000), autonomy and task variety can be added to the list above. Although these factors are important, they will not be deeper explained, because the importance is also stressed in the beginning of this chapter. The previous mentioned factors will be explained beneath and hypotheses are developed.
The first factor that has an impact is having cooperation in cross functional teams. Teams are increasingly seen as a mechanism for bridging boundaries within organisations. Cross functional teams are working groups, created to make decisions lower in an organisation’s hierarchy, that have links to multiple subunits and are designed as an overlay to an existing functional organisation (Denison, Hart, & Kahn, 1996). Cross functional teams are able to bring together the different knowledge sets needed for developing and implementing ideas.
These teams also represent a forum where deeprooted differences in perspectives can be resolved (Jassawalla, 1999). Since ideas are submitted by individuals with different expertise, and each individual can modify the idea in order to increase the chances of success, it can result in better ideas with increased acceptance in the organisation. More importantly, it reduces information flows between departments, since all concerned departments are represented in the cross functional team, which improves the timeliness from idea to implementation.
The second factor related to cross functional teams, is having gatekeepers in the organisation who collect information from various sources, and pass it on to the relevant people who are best able to or most interested in using it. In order to enable learning from previous experiences with ideas, and the implementation of ideas, it is important for gatekeepers to have a system at their disposal wherein they can store and retrieve past ideas.
As the preceding discussion suggests, these factors, either separately or taken together, do appear to have positive influences on the innovative capacity of an employee. This results in the following hypotheses:
H8. Cooperation in cross functional teams has a positive effect on the innovative capacity of an individual.
H9. The presence of gatekeepers in the organisation has a positive effect on the innovative capacity of an individual.
H10. Rewarding an individual intrinsically for ideas has a positive effect on his or her innovative capacity.
H11. Rewarding an individual monetarily for ideas has a positive effect on his or her innovative capacity.
Culture. To flourish, creativity and innovation require an appropriate culture (Tidd et al., 2005). Culture can be defined as “the way we do things around here”. It is a set of shared beliefs in the organisation. Management cannot directly change culture, however it can intervene by providing models and reinforcing preferred styles of behaviour (Tidd et al., 2005). A culture can either support or discourage innovation. In this light, management should reinforce preferred styles of behaviour in order to make a culture innovation supportive. Many writers (Christiansen, 2000: 158; Shtub, Bard, & Globerson, 2005; Tidd et al, 2005) have identified important styles of behaviour that should be reinforced. Important factors are: creating a culture of openness where there is willingness to listen to new ideas, where a sense of intrapreneurship is stimulated amongst employees, and where there is a right to make errors. The factors presented above are further explained beneath, and hypotheses are developed.
this situation occurs, it does appear to have a negative effect on the amount of ideas expressed by employees.
The second important factor when stimulating a culture to be more innovative, is creating a sense of intrapreneurship amongst employees. Cost reduction and customer focus tend to be the primary objectives of innovations and intrapreneurship. The trigger for individual intrapreneurs could emanate from the desire to challenge oneself beyond the obvious (Sheshadri, & Tripathy, 2006). Intrapreneurs seek to reinvent a company in order to increase efficiency and effectiveness. Sheshadri & Tripathy (2006) found that important enablers of intrapreneurial activity in a company are the support of management, the freedom to fail, the ability of management to condone mistakes and an atmosphere of learning.
As mentioned above it is also important tocondone mistakes and create the right to make errors. As West & Farr (1990) and Cristiansen (2000) conclude from their research; it is important to let employees feel that risk taking and the mistakes involved are accepted by management. Employees will step forward with an idea more easily when they know that if their idea fails, management will not blame them. On the contrary, management should give employees the opportunity to learn from mistakes and support the employees in regaining their confidence. This will positively influence the selfefficacy beliefs of an employee.
As the preceding discussion suggests, these factors, either separately or taken together, do appear to have positive influences on the innovative capacity of an employee. This results in the following hypotheses:
H12. A sense of openness in the organisation has a positive effect on the innovative capacity of individual employees.
H13.Creating a sense of intrapreneurship in an organisation has a positive effect on the innovative capacity of individual employees.
H14.Creating the right to make errors in the organisation has a positive effect on the innovative capacity of individual employees.
the organisation and its environment) facilitates the adoption of innovation in organisations. In order to stimulate the innovative capacity through communication inside an organisation, it is important to provide feedback to employees, make use of cross functional teams, and make extensive use of lateral communication (through gatekeepers). In this paragraph lateral communication is explained in more detail. Feedback and the use of cross functional teams are already explained in previous paragraphs.
It is important that an organisation makes extensive use of lateral communication (Brown, 1991). Research by Brown (1991) concludes that the weakest link in a communication process, often the lateral flow of communication is. Employees often find it difficult to share best practices or ideas with each other. Lateral communication is important, since it enables individuals to learn from each others best practices and past experiences (Brown, 1991). They learn from past idea implementations in departments other than their own, and perhaps combine individual ideas to increase the success of ideas.
Rosenfeld & Servo (1990) found that communication gaps easily occur in organisations and that they occur at three different levels. Firstly, an idea generator may fail to take an idea to another due to fear of ridicule. Secondly, first line or middle management does not have the perspective or information needed to deal effectively with all ideas that are brought to their attention. And finally, differences in jargon and differences in mode of operation present the third communication gap. As mentioned before, gatekeepers can link different individuals, in order to assemble the right information or perspective necessary to judge an idea. Gatekeepers can also form cross functional teams, and facilitate team meetings in order to overcome the second and third communication gap. The first gap can be overcome when increasing the beliefs of participative safety amongst employees.
Figur e 1:
Fr amewor k for stimulating the innovative capacity
Innovative capacity individualemployee Innovative capacity or ganisation • Management style • Structure • Culture • Communications Suppor ting or ganisational sur r ounding
Innovation stimulating factor s • Autonomy • Feedback • Ownership of problems • Task variety • Selfefficacy
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Innovative capacity individualemployee Innovative capacity or ganisation • Management style • Structure • Culture • Communications Suppor ting or ganisational sur r ounding3. RESEARCH METHOD
3.1 Pr ocedur e
Interviews were conducted amongst employees at ABN AMRO Verzekeringen, in order to see what effect the presence or absence of each of the fifteen factors has on the innovative capacity and which factors had the strongest effect.
Research was conducted at ABN AMRO Verzekeringen amongst employees of the divisions Business Development, Operations and Organisation and Information Management. The three divisions are accountable for 502 employees in total. The three divisions were selected, because of the fact that the divisions Business Development and Operations are responsible for the primary process of ABN AMRO Verzekeringen and responsible for generating profits (e.g. the core of the organisation).
Staff departments, except Organisation & Information Management are excluded in order to keep the group of employees researchable. The staff department Organisation & Information Management is included in the respondent group for the reason that they are responsible for supporting and advising the management and board of directors of ABN AMRO Verzekeringen in maintaining, developing and expanding an effective and efficient organisation.
26 interviews were conducted which were divided amongst the divisions as a percentage of their employees, in relation to the total number of employees of the three divisions combined (presented in table 1).
TABLE 1:
Par titioning of the inter views amongst the thr ee divisions
In order to obtain the right information from the interviews, each of the fifteen factors was incorporated in a proposition (see Appendix C). Each of these propositions reflect an ideal situation for one of the factors and for each proposition the respondents were asked to answer three questions. Firstly, it was asked if they believed that the statement made in each of the propositions plays a role in
Division Number of
stimulating the innovative capacity in general. Secondly, the respondents were asked what effect the presence or absence of each of the propositions at ABN AMRO Verzekeringen had on the innovative capacity and finally, the question was asked which mechanisms they thought that caused the positive or negative effect. The propositions were used to see which opinion the respondents had in general about the factors, their effects and what mechanisms were responsible for the effects.
The length of each interview was approximately one hour. Before each interview the propositions were sent to the respondents, to give them the opportunity to think and answer what type of role each proposition plays in stimulating the innovative capacity of an individual in general. During the interview the respondent was asked if a typical factor is present at ABN AMRO Verzekeringen. When the factor was present at ABN AMRO Verzekeringen, the respondent was asked to what extent it plays a role (to identify the strength of the factor). Furthermore it was asked what mechanisms are responsible for the occurring effects (to identify important mechanisms).
3.2 Respondents
From the three divisions 26 employees were interviewed. The respondents came from different departments, teams and functions within the three divisions. Several respondents were chosen from each of the selected departments, teams and functions, in order to reach a reflection of the division and to compensate strong personal opinions. The names and functions of the respondents are not mentioned in this thesis, in order to assure anonymity.
3.3 Data analysis
The fifteen factors were clustered in four different components; management style, structure, culture and communication. Through the four point scale in the list of propositions, one is able to identify the differences in strength of the effects caused by each of the fifteen factors. A factor is seen as a critical factor when more than 75% of the respondents mentioned it as having an important or essential role and when more than 25% of the respondents mentioned it as having an essential role.
Decisions on accepting or rejecting a hypothesis were based on the number of positive or negative interview results for that hypothesis (see table 2). Conclusions were based on the reactions of respondents about the effects the presence or absence of the fifteen factors has.
4. RESULTS
Answers given to the propositions are in table 2. These answers are presented in percentages of the total group of respondents. Table 2 reveals the strength of the role each factor plays in stimulating the innovative capacity of an individual. Next to identifying the strength of each factor, this chapter does also reveal the situation at ABN AMRO Verzekeringen and what effect this situation has on the innovative capacity of the employees of ABN AMRO Verzekeringen.
TABLE 2:
Str ength of r ole played by factor s, accor ding to r espondents
4.1 Factor s that stimulate innovation at the level of the individual employee
Autonomy. As can be seen in table 2, the majority of respondents considered autonomy in their work as playing an important, sometimes even essential role in stimulating the innovative capacity of an individual. The interviews revealed two mechanisms that explain why it is stimulating. Firstly respondents argued that a certain amount of freedom enables them to think about their work and increases their efficiency and effectiveness. Secondly, it enables them to solve problems more pro actively, since they have the freedom to anticipate themselves on situations that occur.
Besides the stimulating effect, respondents stated that having autonomy in their work can have a negative effect when each individual works on his own island. When working on an island, each employee could develop his or her own way working, which may confuses customers. Also, working on islands does make it more difficult to share best practices with each other.
Situation at ABN AMRO Verzekeringen. For ABN AMRO Verzekeringen the negative effect mentioned previously may have a strong influence at the Operations division, since employees here are working on islands and sometimes develop their own way of working.
In contrast to the operations division, respondents from the Business Development and OIM division perceive the level of autonomy as sufficiently stimulating to think about their own work, and how to improve it.
Feedback. The majority of respondents argued that feedback plays an essential role in stimulating the innovative capacity of an individual. This essential role is based on several mechanisms, revealed through the interviews, which have a devastating effect on the innovative capacity when feedback is not provided properly. These mechanisms are firstly, no feedback at all, which prevent employees to learn from past ideas and does give them the feeling that ideas are not appreciated. Secondly, received feedback lacks foundation with arguments, which results in no improvement of the quality of the expressed ideas. Thirdly, feedback is not structural, so that the benefits of feedback are secured in the patterns of behaviour of employees and finally, employees sometimes have to take the initiative themselves and ask for feedback. The negative effects of these mechanisms result in employees stopping to express their ideas. It furthermore results in a negative attitude towards and reluctance to participate in new initiatives taken by management to stimulate expressing ideas, and hereby improve the innovative capacity.
notices how many ideas there are in this organisation with which simply nothing happens, or the individuals expressing the ideas never hear anything more about it” . This results in negative attitudes against new initiatives. Employees are reluctant to participate in new initiatives, since they believe nothing will happen with their ideas, and feel they are not being taken seriously.
Ownership of work related problems and ideas. Most respondents perceived ownership of work related problems and ideas as playing an important role in stimulating the innovative capacity. However, opinions are divided whether the effect of ownership is positive or negative. Some respondents consider being the owner of an idea and responsible for development as having a negative effect, since they did not have the time to develop an idea or the lack of self confidence to make it a succes. Others saw being the owner of an idea as a challenge and perceived it as a positive effect on stimulating and expressing ideas, in order to contribute to the success of the organisation.
Situation at ABN AMRO Verzekeringen. At ABN AMRO Verzekeringen it is depending on the situation if employees become the owner of their ideas and since opinions were personal wether it had a positive or negative effect, it was not possible to reveal what effect it has on the innovative capacity of ABN AMRO Verzekeringen.
Task variety. In the case of task variety results are more mixed than the factors mentioned previously (see table 2). A group of respondents argued that a wider variety of tasks places one in a situation where it is necessary to think about the work and enables one to think about improvements. However, a group of similar size stated that irrespective of the variety of tasks an individual has, one can think about the way things can be performed better. More important is that one takes the work seriously. Experiences of respondents learned that it are the same individuals expressing ideas most of the time, irrespective of their variety of tasks (wide variety or more routine work).
4.2 Factor s that stimulate innovation thr ough the management style
Innovation supportive management style. The majority of respondents (see table 2) mentioned an innovation supportive management style as playing an essential role in stimulating the innovative capacity of an individual.
Situation at ABN AMRO Verzekeringen. The situation at ABN AMRO Verzekeringen shows the opposite of what is mentioned above. Employees perceive that expressed ideas and innovation are not taken seriously, since acting on those ideas is a step often not taken by management. In their interview 61% of the respondents mentioned that “expressing an idea” should be seen as a performance objective. This will have a positive effect on stimulating ideas, since the phrase “what gets measured gets done” applies for the culture at ABN AMRO Verzekeringen. When “expressing an idea” will be measured by management, employees will feel more responsible and lower management will pay more attention to it. Furthermore stimulating ideas is perceived as a one time effort, usually employees fall back in their normal routines and pay less attention to developing ideas.
The biggest negative impact is caused by the lack of practical support. Employees perceive that management welcomes ideas, however getting resources (e.g. time) to develop an idea usually has to come from the initiative of employees themselves. They have to do it besides their daily work, or provide colleagues a bigger workload. This is seen as contradictive, and can work as a threshold to express an idea.
Employee involvement. Respondents view employee involvement as important in stimulating the innovative capacity of an individual (see table 2). Three mechanisms are causing the positive effect. These are firstly, employees perceive through involvement that they are taken seriously. Secondly, involvement in sessions about the future of the organisation creates a feeling of responsibility for the rest of the organisation and finally, involvement reduces the risk of communication gaps.
Situation at ABN AMRO Verzekeringen. At ABN AMRO Verzekeringen a clear distinction can be made between ideas that affect the own task or team of an idea champion, and ideas that affect other teams or departments. When it concerns an idea that affects the own task or team, 69% of the respondents believe that they are being enough involved in the process. A reason for this is that the outcome of their ideas directly influences them, and that communication lines are short. It is a different story when an idea concerns another team or department. In this case only 36% believe that they are being involved enough in the continuing process.
A majority misses the involvement in brainstorm sessions or sessions wherein one can think about the future of the organisation. According to employees, team leaders join these sessions most of the time, whereas a large amount of knowledge and experience stays untouched in the lower levels of the organisation. The downside of this is that employees do not feel responsible for the outcome of an idea, or even the success of other teams, departments or the direction wherein the organisation goes.
Participative safety. Participative safety is argued by respondents as playing an important role in stimulating the innovative capacity of an individual. One mechanism mentioned by respondents as responsible for the positive effect is an open and nonthreatening environment which eliminates a threshold for employees to express an idea.
Situation at ABN AMRO Verzekeringen. Anyone who wants to speak can do so, which eliminates a threshold to express an idea. However, two other mechanisms, motivating and involving employees to participate, are insufficient at ABN AMRO Verzekeringen. Respondents stated that these two are necessary for participative safety to have a substantial contribution on the innovative capacity of an individual.
4.3 Factor s that stimulate innovation thr ough the str uctur e of the or ganisation
Cooperation in cross functional teams. Respondents argued that working in cross functional teams plays an important, for many even an essential role in stimulating the innovative capacity of an individual. Mechanisms responsible for providing a positive effect, are first of all, shorter communication lines which increases the timeliness of an idea. Secondly, the quality of ideas is increased, since ideas are viewed by different sources of knowledge and expertise and lastly, employees are feeling involved in, and more responsible for the overall picture in the organisation. A prerequisite constraint stated by respondents is that a cross functional team must consist of an even number of members from all levels (also someone in the position to take a decision), since some employees can feel threatened and insecure when sitting with a majority of team members from one team.
Situation at ABN AMRO Verzekeringen. At ABN AMRO Verzekeringen very few initiatives are taken wherein employees become members of a cross functional team. The ones that are formed confirm the above mentioned mechanisms. However, sometimes only team leaders and specialists become members of a cross functional team, not the employees from the lower levels. In this way a lot of knowledge and experience is unused, employees do not feel involved in the overall picture, and employees are feeling less responsible and motivated to implement the outcomes the teams come up with. This makes it difficult to create a basis to support the implementation of new things.
employees experience that ideas cross too many desks in order to arrive at the right person, this decreases the timeliness of an idea. Sometimes ideas do not arrive at the right location at all. Finally, respondents experience a higher risk of an occurrence of communication gaps in the process of transferring an idea to someone else.
Situation at ABN AMRO Verzekeringen. At ABN AMRO Verzekeringen there are no gatekeepers installed. It gives a clear picture of the negative effect of missing a gatekeeper.
Rewarding ideas. Each of the respondents argued that rewarding employees for expressing ideas has a positive influence on their innovative capacity. However, not every type of reward has the same positive effect. Respondents mentioned open recognition and appreciation as having the strongest influence on the innovative capacity. Reasons for this are that it gives employees the feeling that they and their ideas are taken seriously. Monetary rewards are seen to have an influence that is less strong on the innovative capacity.
Situation at ABN AMRO Verzekeringen. At ABN AMRO Verzekeringen employees who expressed a succesfull idea are rewarded occaisionally. The rewards are most of the time given inside the different teams. The lack of openly recognition, combined with the lack structurally rewarding ideas with the same reward resulted in an situation where intrinsically rewarding an idea has lost his value.
4.4 Factor s that stimulate innovation thr ough the cultur e in the or ganisation
Sense of openness. The factor sense of openness in the organisation is labelled by 62% as playing an important role, while the remaining 38% considered it as playing an essential role in stimulating the innovative capacity. Respondents argued that three mechanisms are causing the effect. Firstly, the ability to freely express ideas ensures that employees expres ideas. Secondly, the freedom and safety to discuss ideas with others increases the quality of ideas and the support inside the organisation to implement the idea, and finally the willingness of management to listen and develop new ideas.
Situation at ABN AMRO Verzekeringen. At ABN AMRO Verzekeringen the first two mechanisms are present inside the different teams. When ideas travel beyond the boundaries of a team these mechanisms disappear, and immediately one sees the negative effects on the innovative capacity. Employees not knowing what happens in other teams or departments and not knowing where to go with an idea are both issues that are feeding these negative effects.
Sense of intrapreneurship. The majority of respondents (see table 2) believe that intrapreneurship plays a small role in stimulating the innovative capacity of an individual. They argue that in order to allow it to have a positive effect on the innovative capacity, three mechanisms are important. Firstly, management should create awareness for the meaning of intrapreneurship, and make clear what is expected from individuals. Secondly, management should keep intrapreneurship alive in the lower levels of the organisation and continuously stimulate it in order to ensure it in the patterns of behaviour. Finally, individuals should have the resources to express and develop intrapreneurial behaviour.
Situation at ABN AMRO Verzekeringen. Employees at ABN AMRO Verzekeringen know that intrapreneurial behaviour is expected from them, however they do not understand what is specifically expected. Besides this lack of understanding, intrapreneurial behaviour is only stimulated occasionally. The negative effect resulting from these two mechanisms is that intrapreneurial behaviour does not live amongst employees, and the ad hoc stimulus quickly disappears, with the result that one falls back into normal routines.
The ad hoc stimulus might work for individuals that possess intrapreneurial behaviour themselves. However, the majority at ABN AMRO Verzekeringen need to be regularly stimulated in order to accept it in their work routines.
Right of error.The factor right to make errors is perceived by respondents as playing an important role in stimulating the innovative capacity of an individual. According to them it is important in two ways. First of all it is important for the selfefficacy beliefs of individuals, if errors are accepted when trying new things, and one learns from them, this will reduce the negative influence of failure on the self efficacy beliefs of individuals. Secondly, perceiving an organisation as approaching new things in a constructional way will reduce any thresholds for employees to express ideas.
Situation at ABN AMRO Verzekeringen. The situation at ABN AMRO Verzekeringen is generally perceived as one in which errors are accepted.
4.5 Factor that stimulates innovation thr ough the communication in the or ganisation
Use of lateral communication. The majority of respondents (see table 2) argued that the use of lateral communication plays an important, some even essential role in stimulating the innovative capacity of an individual. The positive effects are reducing the chances of duplicating ideas at different locations in the organisation, sharing best practices, and reducing thresholds for sharing ideas with colleagues in other teams and/or departments.
anticipate on opportunities, and share experiences and best practices. Secondly, employees should know to which colleagues to go to when having a certain idea. Third there should be interaction between teams and departments in order to keep the flow of communication ongoing.
Situation at ABN AMRO Verzekeringen. In general, at ABN AMRO Verzekeringen the different teams and departments are more or less islands. Little communication takes place between them. When discussions or meetings take place between teams or departments, only team leaders and specialists are the only participants most of the time. However, individuals in these functions are less involved in the processes and business. Due to the lack of the mechanisms mentioned above for the lower levels of the organisation, the opposite situation is a reality. Respondents mentioned that besides the experienced thresholds due to the lack of communication and heavy workload, one sometimes simply does not think about sharing information with other teams or departments.
5. CONCLUSION
‘Let a thousand flowers bloom’.
Innovations, like flowers, start from tiny seeds and have to be nurtured carefully until they blossom; then their essence has to be carried elsewhere for the flowers to spread. Some conditions, soil, climate, fertilizer, the layout of the garden, produce larger and more abundant flowers. Innovations can grow wild, springing up weedlike despite unfavourable circumstances, however they can also be cultivated, blossoming in greater abundance and grow under favourable conditions.
Rosabeth Moss Kanter
The purpose of this research was getting an insight into the factors and their mechanisms that stimulate the innovative capacity of individual employees. Additionally, getting an insight into the extent that ABN AMRO Verzekeringen, as a case study, stimulates the innovative capacity of their employees. To give meaning to this research question, 15 factors were defined and each was tested for the role it played in stimulating the innovative capacity of an individual. Each of these hypotheses is accepted.
The results will teach us that the innovative capacity of an individual is influenced by numerous factors. Striking was that a few factors have been mentioned by almost all respondents as factors with a much stronger effect on the innovative capacity than the others factors. (table 2, page 18). These factors are labelled as ‘critical factors’, in the process of increasing the innovative capacity. Table 2 does give an answer to the first question: “To what extent does the presence or absence of each factor in an organisation play a role in stimulating the innovative capacity of an employee?”
Paragraph 5.1 explains the critical factors alongside their mechanisms and by doing so will give an answer to the second research question: “ How is it that these factors do have an effect on the innovative capacity of an employee?”
Paragraph 5.2 answers the third research question:“ To what extent does the management of ABN AMRO Verzekeringen stimulate the innovative capacity of their employees?”
Paragraph 5.3 contains a table with recommendations for ABN AMRO Verzekeringen to increase the innovative capacity of their employees.
5.1 Cr itical factor s with their mechanisms when incr easing the innovative capacity
employee involvement in innovation, rewarding ideas intrinsically, presence of gatekeepers, and use of lateral communication.
TABLE 3:
Mechanisms behind the cr itical factor s
Cr itical factor s Mechanisms
Pr oviding str uctur al feedback · Structural feedback gives an employee insight into the bigger picture of an organisation and what the direction is wherein that organisation goes. · Structural feedback gives an employee the feeling that he is taken seriously and is contributing to the success of an organisation. · Structural feedback will show an employee that something is done with his ideas. Sense of openness in an or ganisation · Sense of openness ensures a form of safety for employees to express their ideas in an organisation. · Sense of openness in an organisation provides employees the freedom and safety to discuss their ideas with peers or superiors. · A willingness by superiors to listen to ideas and the will to do something with them motivates employees to express ideas and increases the chances of success of an idea.
Employee involvement in innovation · Employees feel that they and their ideas are taken seriously by management. · Employees feel more responsible for the rest of the organisation and when involved employees are more likely to invest in the outcomes of decisions. · When employees are more involved in the development process, they become more receptive to change. · Involvement of idea champions in the process of developing and implementing their idea, decreases the risk of the occurrence of communication gaps.
Rewar ding ideas intr insically · Employees feel that their ideas are appreciated and most important that they are taken seriously.
Pr esence of gatekeeper s · A gatekeeper knows where to go, when someone comes up with an idea (or half formed idea).
· A gatekeeper can link two employees, whom on their own experience it as a threshold to come up with an idea.
Providing structural feedback. Providing structural feedback is seen as an important factor in stimulating the innovative capacity. Feedback is almost always focussed on giving insight in the performance of an individual. When it concerns innovation, feedback is necessary, in order to keep an individual motivated. According to the respondents there are three mechanisms that strengthen the effect of feedback.
Firstly, it gives an employee insight into the bigger picture of an organisation and what the direction is wherein that organisation goes. This does enable him to use his expertise to think about ways to make that organisation more effective and to anticipate on opportunities in his work.
Secondly, it gives an employee the feeling that he is taken seriously and is contributing to the success of an organisation. This is a strong intrinsic motivator for employees and ensures that employees keep thinking about improving the organisation.
This kind of self motivation is important to increase the innovative capacity of individuals. Studies done by Amabile (1988) at innovative organisations conclude that 40% of the respondents stated that self motivation is the most important mechanism to increase the abilities to be more innovative. Proper feedback does also create a sense of involvement within individual employees, which is seen as another critical factor in stimulating the innovative capacity.
Finally, it let an employee see that something is done with his ideas. This is important for two reasons. Firstly it does give an employee the feeling that it is useful to express ideas and that it is appreciated by management. It also shows an employee why a certain idea is good or not. It helps him to improve his ideas in the future, it enables him to learn. Therefore feedback should be given structurally and with good founded arguments.
Sense of openness in an organisation. A sense of openness in an organisation is the second critical factor. According to the respondents there are three mechanisms responsible for the strength of the effect on the innovative capacity.
Firstly, it ensures a form of safety for employees to express their ideas in an organisation. This creates a flow of ideas in an organisation, which only have to be directed through a quality filter to separate the good from the bad ideas.
Secondly, openness in an organisation does provide employees the freedom and safety to discuss their ideas with peers or superiors. When employees perceive their surrounding as safe to express ideas and discuss them with others, it has a positive effect on their self efficacy beliefs and reduces the thresholds to express ideas.
results in a failure. This could have a negative influence on the self efficacy beliefs of that employee as a side effect.
Innovation supportive management style. Research of Oke (2004) shows that management which has an innovation supportive management style find it less difficult to motivate employees to innovate. There are three mechanisms defined by research from West (1990) responsible for the positive effect in a supportive management style.
Firstly, taking expressing ideas seriously motivates employees to think about ways to improve their work or the organisation. Employees must perceive that ideas are expected from them. Changing the behaviour of individuals effectively requires that new behaviour is implemented in their daily routines. In the beginning new behaviour should be stimulated continuously in order to reduce the chances of individuals falling back in their old routines. Therefore employees should be continuously reminded that ideas are expected and appreciated. This secures it in the patterns of behaviour of those employees.
Secondly, continuously stimulating expressing ideas secures this behaviour in the patterns of behaviour of employees. Continuously stimulating expressing ideas creates not only an expectation for ideas. Management must approve and actually do something with ideas from employees. This is a crucial step in the motivation of employees, when this step is neglected it creates reluctance amongst employees to innovate.
Finally, providing practical support enables employees to actually develop ideas. Employees must have resources (e.g. time, money) to think about ideas and develop them. At ABN AMRO Verzekeringen a large group of employees experience a high workload which results in a lack of time to think about new ideas.
Cooperation in cross functional teams. “Their essence has to be carried elsewhere for the flowers to spread” , is a metaphor that explains the importance of cross functional teams, as they function as gateways for ideas to travel to different teams and departments. The effect of cross functional teams is according to the respondents caused by four mechanisms.
Firstly, working in cross functional teams decreases communication lines and reduces information flows between different teams and departments. Usually teams and departments in an organisation are seen as islands, where there is little communication between them. For innovation it is important to communicate with colleagues with different views and knowledge sets.
Thirdly, cross functional teams can work as a forum where deeprooted differences in perspectives are resolved between different teams and departments, which increase the acceptance of ideas in an organisation.
Finally, employees feel more involved when working in cross functional teams and they feel themselves more responsible for the bigger picture of an organisation.
Two prerequisite constraints when working in cross functional teams are, teams must consist of members evenly divided from all levels (also someone in the position to take a decision) and it is important that members of cross functional teams share outcomes with colleagues in their regular work area.
Employee involvement in innovation. Employee involvement is the fifth critical factor when increasing the innovative capacity. It is important to involve employees in the development and implementing process of ideas. According to the respondents four mechanisms are responsible for the positive effect.
Firstly, employees feel that they and their ideas are taken seriously by management. As mentioned before this is a strong motivator for employees to keep expressing ideas. When involved, employees will see and understand the difficulties in a development and implementation process. This can result in better ideas from them in the future.
Secondly, employees will feel more responsible for the rest of the organisation and when involved employees are more likely to invest in the outcomes of decisions.
Thirdly, when employees are more involved in the development process, they will become more receptive to change.
Finally, involvement of idea champions in the process of developing and implementing their idea, will decrease the risk of the occurrence of communication gaps (see page 10 and 21).
Rewarding ideas intrinsically. Rewarding ideas intrinsically is also a critical factor. As mentioned in the theoretical chapter, research by Coyne (1996) showed that individual recognition through peers is an effective rewarding structure to stimulate innovation. Rewarding intrinsically has a positive effect on employees because they feel that their ideas are appreciated and most important that they are taken seriously. A positive side effect is the influence on the self efficacy beliefs of employees. The judgment of an employee about his own actions can be positively influenced through appreciation and recognition from his surroundings. It will increase the self confidence of that employee and stimulates him to express more of that behaviour (for example express ideas).
of desks an idea has to pass in order to arrive at the right people, with it the risk of communication gaps.
For an organisation the size of ABN AMRO Verzekeringen it is difficult to keep track of what everyone is doing and to connect ideas with the right persons in the organisation. Using gatekeepers will solve this problem.
According to the respondents mechanisms responsible for solving this problem are: they know where to go, when someone comes to them with an idea (or half formed idea) and they can link two employees, whom themselves experience it as a threshold to come up with an idea.
Use of lateral communication. Lateral communication is important, since it does enable individuals to learn from each others best practices and past experiences. They can learn from past idea implementations in departments other than their own and maybe combine individual ideas to increase the success or reduce the risk of duplication.
The mechanism behind lateral communication is to create interaction between different teams and departments and keep this interaction ongoing. This can be realized for example, through cross functional teams. Employees should know what happens inside an organisation and share ideas with others teams.
The critical factors mentioned above have the strongest effect on stimulating the innovative capacity of individuals, and subsequently an organisation. This effect can be positive when the mechanisms explained are used properly. The critical factors can increase each other in their effects and show a considerable amount of overlap.
5.2 To what extent does the management of ABN AMRO Ver zeker ingen stimulate the innovative capacity of their employees?
This paragraph will give an answer to the third research question: “ To what extent does the management of ABN AMRO Verzekeringen stimulate the innovative capacity of their employees?”
As an answer one can say that ABN AMRO Verzekeringen does not exploit the full innovative potential of their employees. The organisation has the facilities and resources to enable employees to innovate. Strength of the organisation is the openness inside most of the teams. Respondents stated that employees feel very safe to discuss and express everything, however between teams this openness disappears. Teams function mostly as islands inside the organisation.
in a structural way, or find ways to do things better. When employees do not occasionally think about new ways, they will fall into a routine and are hard to set in motion again.
Good ideas exist and some are implemented successfully, nevertheless these are incidents, new initiatives are started now and then and disappear to the background quickly, resulting in employees who are falling back into their old routines. To exploit the innovative capacity at a maximum, management should deal with innovation in a structural way and stick to the initiatives that are started.
Employees need to believe in innovation and management must take their hand and lead them through the first steps. Implementing the recommendations stated in this thesis is a good first step to take.
Innovations are growing wild, weedlike. The climate at ABN AMRO Verzekeringen is good, however soil, fertilizer and especially a good layout of the garden are missing.
5.3 Recommendations for ABN AMRO Ver zeker ingen
