Connecting theory to practice in the context of organizational innovation: A practice-based approach

Connecting theory to practice in the context of organizational innovation: A practice-based approach

Hjalmar Ruiter 1936948

Msc. BA Change Management Faculty of Economics and Business

University of Groningen June 20, 2016

Supervisor:

Dr. I. Maris-de Bresser Co-assessor:

Dr. J. F. J. Vos

Word count: 13.201

Abstract. Organizational innovation can be an important source for gaining competitive advantage. However, despite the importance of the subject, the process and mechanisms of how organizational innovation happens in practice is still relatively unknown. Prior research predominantly has theorized organizational innovation at the macro level and has ignored the role of the activities and interactions of the actors that constitute the organization. The goal of this study is to bridge the gap between theory and practice and takes a practice-based approach in examining organizational innovation by investigating the role of the activities and interactions of organizational actors. A qualitative single site case study, including twelve interviews is conducted at a financial services firm going through a process of organizational innovation.

Results of this study show that innovations are collaboratively generated at the crossroads of communities of practice where knowledge is shared, where plans and ideas are negotiated, and where employees at all levels of the organization are involved.

Keywords: Organizational innovation, Practice-based Approach, Communities of Practice

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Table of Contents

1. Introduction ... 3

2. Literature Review ... 6

2.1 Generation of Organizational Innovation ... 6

2.2 Adoption of Organizational Innovation ... 7

2.3 Practice Theory and Communities of Practice... 7

2.4 Innovation as an Organizational Practice ... 8

3. Methodology ... 10

3.1 Research Design: Qualitative Case Study ... 10

3.2 Data Collection ... 11

3.3 Data Analysis ... 14

3.4 Ensuring Research Quality: Controllability, Reliability, and Validity ... 15

4. Findings ... 16

4.1 The Array of Innovation Activities Identified in the Case ... 16

4.2 Knowing in Practice and Learning by Doing: Sustaining the Change ... 22

4.3 Organizational Outcomes and Effects of the Innovation Practice ... 25

5. Discussion and Conclusion ... 26

5.1 Discussion ... 26

5.2 Theoretical Implications ... 30

5.3 Managerial Implications ... 31

5.4 Conclusion ... 31

5.5 Limitations and Avenues for Further Research ... 31

References ... 33

Appendices ... 37

Appendix A: Code Book ... 37

Appendix B: Interview Protocols ... 40

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1. Introduction

)nnovate or die . This is an often heard statement in the world of business and captures the importance of the concept of innovation. Both academics and business managers view innovation as an important source of gaining competitive advantage in an increasingly dynamic environment (Adams, Bessant & Phelps, 2006; Bucherer, Eisert & Gassmann, 2012; Crossan &

Apaydin, ; D Alvano & (idalgo, ; Ganter & (ecker, . Innovating can help firms adapt to the rapid environmental changes and gives an opportunity to actively shape the change (Drejer, 2002; Ganter & Hecker, 2014). Thus, innovation is a way to continuously develop and to ensure firm competitiveness in these modern times characterized by hyper-competition (Crossan & Apaydin, 2010; Drejer, 2002). Moreover, innovation is regarded as an important determinant of firm performance and firm growth (Adams, Bessant & Phelps, 2006; Crossan &

Apaydin, 2010; Drejer, 2002; Ganter & Hecker, 2014; Hidalgo & Albors, 2008).

The field of innovation has been given extensive attention by scholars. The innovation literature has focused on many different aspects of innovation. Three main types of innovation can be identified from the existing body of literature: product or service innovation, production process innovation, and organizational innovation. The focus of prior research on innovation has mainly been on technology-based innovation concerning the first two types of innovation: the development of new products or services and production processes (Crossan & Apaydin, 2010;

Damanpour & Aravind, 2011; Ganter & Hecker, 2014). However, not all innovations are technology-based. Although ignored for long, a small but growing number of researches have recently given attention to the third type of innovation: organizational innovation (Crossan &

Apaydin, 2010; Damanpour & Aravind, 2011; Ganter & Hecker, 2014; Seifried & Katz, 2015). The now recognized importance of organizational innovation has led to the need of development of theories and models on the topic (Damanpour & Aravind, 2011).

Organizational innovation is referred to as the development and implementation of new strategies, organizational structures, management practices, processes, and techniques that have the potential to create value and support a firm s practices Damanpour & Aravind, ; Ganter

& Hecker, 2014; Seifried & Katz, 2015). From the existing body of organizational literature, two main conceptualizations of organizational innovation can be derived: innovation as an internal, developmental, creative process (generation), and as the adoption (use) of an innovation that originated outside of the organization (Crossan & Apaydin, 2010; Damanpour & Aravind, 2011).

It is conceived of as both a process, and as an outcome (Crossan & Apaydin, 2010; Damanpour &

Aravind, . Toyota s production system and supplier network is an example of an

innovation as a developmental, creative process and illustrates how organizational innovation

can assist in outperforming competitors and shaping the environment of the firm (Dyer &

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Nobeoka, 2000). Another example is the multidivisional structure at General Motors (Chandler, 1962). Examples of adopted innovations that originated outside of the organization are practices such as Total Quality Management, divisional organizational structure, or just-in-time production (Damanpour & Aravind, 2011; Ganter & Hecker, 2014). These examples clearly illustrate the relevance of organizational innovation and the potentially crucial role it can have for a firm. Furthermore, Mol and Birkinshaw (2009, p. 1269) describe organizational innovation as one of the most important and sustainable sources of competitive advantage . This also emphasizes the managerial interest in the topic of organizational innovation.

Both perspectives of organizational innovation (as generation and as adoption) offer insightful knowledge about the nature of innovation in organizations. However, these are not without limitations. In the early days of innovation research, the focus was on technological innovation in which the innovation process was viewed as a mechanical, smooth, and linear process in which stages are assumed to follow each other in an orderly and sequential manner (Kline & Rosenberg, 1986; Van de Ven, Polley, Garud & Venkataraman, 2008). Although there are variations of linear models of innovation, the basic idea of these models is that innovation starts with basic research, then moves to applied research and development, and ends with the stage of production and diffusion (Godin, 2006; Kline & Rosenberg, 1986; Van de Ven et al., 2008).

When applied to organizational innovation the view of innovation as a smooth linear process has been criticized for being naïve and incomplete (Kline & Rosenberg, 1986; Rosenberg, 1994). For instance, one of the limitations of the linear model is that it does not account for feedback and interaction between the stages in the linear model (Kline & Rosenberg, 1986; Williams & Edge, 1996). Furthermore, the linear model of innovation does not account for the influence of environmental and social factors (Kline & Rosenberg, 1986).

More recent research recognized that innovation is not at all a linear process with a clear beginning and end. They argued that the process of innovation is complex and much more a messy , disorderly process than a linear one Van de Ven et al., ; Rogers, . )n response to the criticism of the linear model of innovation, these studies introduced the view of innovation as a non-linear, iterative process (Utterback & Abernathy, 1975). Yet, the view of innovation as a non-linear, iterative process has not been immune to critique itself. For instance, it is mainly theorized at the macro level and does not account for the micro-foundations of how innovation at the organizational level actually comes about.

Another strand of literature that springs from the work of Brown and Duguid (1991) on

communities-of-practice offers a new perspective on organizational innovation. This

perspective allows us to see and explain innovation in a way that the previous perspectives were

unable to reveal: to see innovation as a process that emerges during actual daily work, when

ideas, plans and narratives are being negotiated and shared during the interactions among

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employees with different skills and knowledge within these communities (Corradi, Gherardi &

Verzelloni, 2010; Gherardi, 2010; Schatzki, 2001). It is these factors together that influence the emergence, the nature, and the quality of innovations in an organization. By seeing an organization as a constitution of separate communities with different perspectives and competing ideas, ultimately, interchanges among these communities can provide a highly fertile ground for organization innovation. It would therefore be very interesting to research how these practice-based factors influence organizational innovation.

In this research I will follow Brown and Duguid (1991), and more recently Crossan and Apaydin s call for an examination of innovation as a practice. More specifically, in this study I will examine how innovation emerges in practice. Given the theoretical and managerial interest in the concept of innovation it is surprising that the available academic research is still often disconnected from the actual innovation action of practitioners in business (Crossan &

Apaydin, ; Liyanage, . What practitioners actually do affects a firm s innovation (Crossan & Apaydin, 2010). For instance, if the implementation of a certain innovation is poorly managed or wrongly diffused, the innovation will not deliver the outcomes a firm was expecting.

To fully understand the process and mechanisms of innovation, theory and practice need to be connected. Calling upon the need for a more complete theory of innovation this paper aims to bridge the gap between theory and practice by investigating the role of the practitioners in the context of organizational innovation. The research question that guides this study is:

How is organizational innovation generated in practice?

The theoretical significance of this research is its contribution to the literature of organizational innovation by studying innovation from a practice-based perspective. This research thereby answers Crossan and Apaydin s call to study innovation as a practice.

Taking a practice-based approach is relevant because it provides insight in the microdynamics of everyday organizational practices and shows how innovation happens in a real life setting.

From a managerial point of view, the interest in the concept of innovation hardly needs to be explicated. As stated above, organizational innovation is viewed as an important source for gaining competitive advantage. Furthermore, existing academic research is often still disconnected from actual day to day organizational practice (Crossan & Apaydin, 2010;

Liyanage, 2003). Taking a practice-based approach in studying organizational innovation has the

potential to provide the link between theory and actual organizational practice. This study

therefore contributes by generating insights into how organizational innovation happens in

practice, which may be valuable information for innovation practitioners and innovating firms.

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2. Literature Review

This section provides a brief overview of prior research on organizational innovation, and gives an introduction to practice theory and how it is applied in this study of organizational innovation.

2.1 Generation of Organizational Innovation

Studies on innovation that posited the above mentioned models were still mainly focused on technological and product innovation. The process of organizational innovation as defined in this paper, however, had not been studied in depth until recently. Birkinshaw and Mol (2006) were one of the first to propose a model that described the generation process of organizational innovation. They state that the generation of organizational innovation typically occurs in five recognizable main stages: (1) dissatisfaction with the status quo, usually from within the company as a result of a future threat, a current problem, or a means to escape a crisis; (2) inspiration, usually from source outside the company in the form of, for instance, the ideas of management thinkers and gurus; (3) invention, which is triggered by a combination of dissatisfaction with the status quo, inspiration from outside, and a clear understanding of the internal situation and context; (4) internal validation (e.g., a senior executive promoting the innovation, or clear evidence of the value of the innovation) and external validation (e.g., a consulting organization that codifies and documents the innovation so that it can be used in other companies); and (5) diffusion to other organizations (Birkinshaw & Mol, 2006).

In their seminal paper, Birkinshaw, Hamel, and Mol (2008) put forward a model of the

generation process of organizational innovation that consists of four phases: (1) motivation, this

phase refers to the conditions and facilitating factors that result in the development of, and

experimentation with a new organizational innovation; (2) invention, in this phase the new

practice is first tried out in an experimental way; (3) implementation, in this phase the value of

the new management innovation is established in a real setting; and (4) theorization and

labeling, in which the process of internal and external legitimization of the management

innovation occurs, and finally gets labeled. These models provide useful insights in how

organizational innovations are generated but are aimed at explaining the phenomenon at an

organizational level of analysis. Moreover, although recognizing that organizational innovations

are generated as a result of perceived problems in the environment, most research takes the

environment as a given and thereby do not account for any changes in the meso or macro

environment (Birkinshaw et al., 2008; Volberda, Van den Bosch, & Mihalache, 2014).

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An organizational innovation is not always necessarily invented in the organization that implements a particular organizational innovation. The innovation can also be invented outside of the company that adopts and implements it. For instance, organizational innovations such as Six Sigma, TQM and just-in-time production are adopted by many other organizations than the ones that invented these practices. Klein and Sorra (1996) describe a model for the process of adoption of organizational innovation that consists of five phases: awareness, selection, adoption, implementation, and routinization. Alänge & Steiber (2011) proposed a similar model of the adoption of organizational innovation which goes more into depth concerning the selection process and consists of four phases: perception of desirability, perception of feasibility, first trial, and implementation. The perception of desirability is influenced by external pressures either originating from the market or due to institutional changes. The perception of feasibility refers to whether the particular organizational innovation is feasible for the adopting firm and is influenced by external legitimization of the innovation, meaning that the innovation proved to be beneficial in similar organizations as the adopting firm. First trials are conducted to evaluate the innovation in pilot projects. In the implementation phase the innovation gets adapted to the needs of the organization and gets implemented organization wide.

Similar to the models of the generation of organizational innovation, the models for adopting organizational innovation focus on the organizational and institutional level of analysis and thereby overlook the micro-foundations of the organizational level outcomes. These micro- foundations such as the individuals that constitute organizations, who search for problems, interact, make decisions, and provide ideas have largely been overlooked in previous research on organizational innovation but are important in explaining why and how organizational innovation comes about (Volberda et al., 2014). A promising way of connecting individual, organizational, and institutional levels of theorizing is an application of the practice-based approach (Crossan & Apaydin, 2010).

2.3 Practice Theory and Communities of Practice

The theoretical perspective from which innovation will be researched in this study stems from Brown and Duguid (1991), who introduced the idea of studying organizational innovation from a practice perspective. Yet somehow their theory has remained underdeveloped, as it did not really catch up in the literature, only a limited number of studies used their perspective on innovation.

Crossan and Apaydin (2010) recognize the importance of the practice and re-state the

call to study innovation from a practice perspective. They argue that in order to gain insights

into how innovation emerges, one must access the activity level of an organization and

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investigate what managers actually do when they innovate, what type of knowledge they use, and how these so called activity level theories-in-use influence the outcomes of innovation at the organizational level. Furthermore, Brown and Duguid (1991) suggest that innovation happens in practice, where communities of practice with competing ideas, different skills and knowledge come together and where plans, ideas and narratives are shared and negotiated. Interchanges among these communities can provide the ground for innovation and influence the emergence and nature of innovations in an organization. For instance, colleagues of different departments working together, share insights about their practices, tap int o to each other s knowledge and combine their knowledge to generate innovative solutions for organizational issues. Thus, innovation is something that is achieved together when engaging in collective action; it is a collective and situated activity. It is these types of practice-based mechanisms that I will examine in this study.

2.4 Innovation as an Organizational Practice

Although an extensive overview of practice theory and its origins is beyond the scope of this study, this section will give a brief introduction to practice theory. The origins of practice theory lie in philosophy and sociology, with theorists like Foucault, Bourdieu, Wittgenstein, Giddens, and Latour as some of the main contributors to the concept of practice Corradi et al., 2010; Feldman & Orlikowski, 2011; Schatzki, 2001). Practice theory emerged as a rejection of problematic dualisms and ways of thinking (Feldman & Orlikowski, 2011; Schatzki, 2001). These dualisms include oppositions such as structure and agency, individual and institutional, and mind and body (Feldman & Orlikowski, 2011; Gherardi, 2012; Schatzki, 2001). According to Schatzki (2001), there is no unified practice approach. However, despite the diversity, some features and concepts are common to all perspectives on practice theory. Practice theorists share the believe that phenomena as knowledge, human activity, meaning, language, science, and social institutions occur within and are elements of fields of practices, which is described as the total nexus of interconnected human practices Schatzki, , pp. . Furthermore, central to the practice lens is the belief that social life is an ongoing production and emerges through interactions among people (Feldman & Orlikowski, 2011).

In organization studies, the practice-based approach has been used as a critical

epistemological lens to criticize the conventional rationalist and cognitivist accounts of

organizations (Corradi et al., 2010; Gherardi, 2009b). For instance, practice theorists see

knowledge and knowing not as something that is possessed by an individual, but as collective

and situated activity (Corradi et al., 2010; Gherardi, 2008; Gherardi, 2012). Consequently,

learning is not an individual phenomenon but a participative social process which is done in

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everyday organizational activity and is thus fabricated by situated practices of knowledge production and reproduction (Corradi et al., 2010; Gherardi, 2008).

Furthermore, the practice lens in organization studies is used to overcome the traditional distinction between micro and macro levels of theorizing. For instance, individualists ascribe too much influence to human actors, such as leaders or managers decision making abilities, and thereby neglecting macro phenomena, such as institutional structures, whereas structuralism attributes too much influence to social forces by arguing that social phenomena are composed of something other than individuals or groups and thereby largely overlook the micro level (Corradi et al, 2010; Gherardi, 2009a; Orlikowski, 2010; Schatzki, 2001; Whittington, 2006). Schatzki (2001) offers an alternative ontology in between individualism and structuralism by arguing that practices are the primary social thing and are constitutive of social reality. Moreover, the organization studies of practice share the interest in the situated and collective nature of practices, the importance of practical knowhow, and the role of learning processes within a community of practitioners (Corradi et al., 2010: Gherardi, 2009a).

Practice studies have been applied to various types of organizational phenomena which include the use of technology in practice (Gherardi, 2010; Orlikowski, 2000), marketing (Allen, 2002), strategy (Whittington, 2006), and learning and knowledge in organizations (Brown &

Duguid, 2001; Nicolini, 2011). With this study I build on these works by examining yet another organizational phenomenon from a practice-based perspective, namely innovation.

In their article on practice-based studies, Corradi et al., (2010) describe three lenses from which a practice can be studied: (1) from the outside; (2) from the inside; and (3) as regard to its social effects. Applied to the current study of organizational innovation these three lenses are utilized empirically to study: (1) the interconnected activities organizational actors conduct when they engage in innovation, this refers to what practitioners actually do when innovating;

(2) the bodies of knowledge organizational actors use when they engage in innovation and their shared way of doing things that guides the activities and allows the continuous negotiation of the meaning of a practice, this refers to the practical understanding of how innovation is done;

and (3) the effects of the innovation, these effects refer to how the organization changes as an outcome of the activities of the practitioners, and consequently how these outcomes create the context for new innovations.

These three lenses were used as tools in this study as a guide to structure interview

questions, data collection, and were used for the presentation and discussion of the research

results.

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3. Methodology

This section gives a description of the research methodology that is used in this study.

First, the research design will be explained. Second, the data collection methods are described.

Third, a description of the data analysis is given. Fourth and last, the research quality will be discussed in terms of controllability, reliability, and validity.

3.1 Research Design: Qualitative Case Study

The available academic research on innovation is still disconnected from the actual innovation action of practitioners in business (Crossan & Apaydin, 2010; Liyanage, 2003). Most studies on innovation are quantitative in nature and fail to capture the relation between innovation theory and actual innovation practice. The purpose of this study is to develop new knowledge about this link and attempts to fill the gap in the literature. Moreover, this study aims to explain how innovation emerges in practice.

Given the exploratory nature of this study and the fact that prior research on organizational innovation fails to fully explain the described business phenomenon, a theory development approach is most fit (Merriam, 2002; Van Aken, Berends & Van der Bij, 2012).

Moreover, a theory development approach is appropriate when there is little known about the phenomenon of interest (Van Aken et al., 2012; Yin, 2009).

To gain insights in the phenomenon in question, a single site case study is conducted. A case study is a research strategy which focuses on the dynamics within a single setting and can be used to generate theory (Eisenhardt, 1989). Moreover, a case study is suited to gain insight in complexities of evolving interaction processes and the outcomes of them (Yin, 2009). The framework for building theory from a case study research of Eisenhardt (1989) is used as a guideline in the process of the case study.

The selected case in this study is the Dutch subsidiary of a multinational organization that operates in the domain of financial services. The Dutch subsidiary approximately has 4,500 employees and offers a wide range of financial products, with their main activities being mortgages, pensions, long-term savings, life insurances, and general insurances (e.g., car insurances, liability insurances, home insurances). The Dutch subsidiary has two offices in The Netherlands: one in The Hague, and one office in Leeuwarden. The activities of both offices are overlapping and therefore the activities at both offices of the Dutch subsidiary are examined in this study.

The Dutch subsidiary has generated the strategy to become a more efficient and more

customer-centric company. In pursuit of their strategy, the company initiated a process of

organizational innovation in order to become more efficient and more customer-centric. To

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achieve this goal, approximately two years ago they created a department called Operational Excellence Opex . At the time of this study, this department consisted of ten Opex managers that function as internal consultants. The main activity of this department is to optimize business processes from the viewpoint of the customer and to create a culture of continuous improvement throughout the company. Pairs of two Opex managers get assigned to a specific department to help them become more efficient and more customer-centric. On average, the duration of such an assignment is three to six months per department. The departments they are assigned to vary from Human Resources and Finance, to customer service departments. In this research, the innovation practices of the Opex managers were studied. More specifically, the innovation practices of the Opex managers at the departments delivering customer services with which they collaborated in order to make them more efficient and customer-centric.

The case of this study, namely the innovation process of the Dutch subsidiary, was selected for its relevance for the research question and based on theoretical sampling strategy.

According to Coyne (1997), the initial stage of theoretical sampling involves the purposeful selection of a sample that is determined in order to examine the phenomena where it is found to exist. The selected company is going through a process of developing and implementing a new strategy, organizational structures, management practices, and organizational processes, which are aimed at making them more efficient and customer-centric. For instance, they are optimizing processes from the viewpoint of the customer and are introducing new organizational forms such as daily team meetings in which employees can participate in solving customer problems.

The company s activities fit the definition of organizational innovation given in the introduction;

the selected company is therefore well suited for this study.

Yin (2009) states that unit of analysis in case study research can be concrete like individuals and organizations, or can be more abstract such as relationships, decisions, or communities. In this study, the unit of analysis is of the more abstract type, namely the innovation process at the Dutch financial service firm.

3.2 Data Collection

The main source for data in this study was in-depth interviews, complemented by

observations, firm documents about the organizational strategy, company information about the

Operational Excellence department, and numerous informal talks with employees and team

leaders of the customer service department. Using multiple data collection methods provides the

opportunity to corroborate evidence from other sources and draw more credible conclusions

(Maxwell, 2005; Yin, 2009).

12 Interviews:

A total of twelve interviews were conducted at the financial service company. First, six interviews were conducted with six different Operational Excellence managers. The interviews were semi-structured in order to leave room for any subjects or issues that arose spontaneously during the interviews (Van Aken et al., 2012). Two of the interviews were conducted at the company office in Leeuwarden and four interviews were conducted at the main office in The Hague. The interviews all lasted between 45 and 75 minutes. For each interview, sufficient time was planned in order to be able to ask all the relevant questions without having to hurry. Before the start of the interview, anonymity and confidentiality was assured, and permission was asked to record the interviews. Two respondents were selected because they were part of the implementation of the daily meetings at the customer service department. One of these respondents directed me to the other four respondents.

The topics that were discussed during the interviews were guided by the three lenses of the practice-based approach. Examples of topics discussed in the interview were the generated innovations, the interaction and decision making processes during the innovation process, applied knowledge and knowledge transferring, methods of innovating, and organizational outcomes. For instance, questions were asked such as: what knowledge do you need to have to achieve the desired result? , what knowledge do you think employees need to have to achieve the desired r esult? , why is that important knowledge? , how are decisions being made? , what are the outcomes of the innovations? . Furthermore, the first interview was also used to obtain additional background information of the Operational Excellence department. For instance, questions were asked about when the department was created, and of how many employees it consists, et cetera.

The other six interviews were conducted with six different team leaders at the customer service department. These were also semi-structured in order to leave room for any subjects or issues that arose spontaneously during the interviews (Van Aken et al., 2012). Two interviews were conducted at the main office in The Hague, the other four interviews were conducted at the office in Leeuwarden. The interviews all lasted between 30 and 60 minutes. Here too, sufficient time was planned for the interview and before the start of the interview, anonymity and confidentiality was assured, and permission was asked to record the interviews. Five team leaders were selected on the basis of the composition of the tasks of their teams in order to discover possible variation in the way the daily meetings were held at the teams. One team leader was selected because he was part of the pilot implementation of the daily meetings and got extensive training and feedback of the Operational Excellence managers in how to conduct the daily meetings and was therefore judged to be a potentially valuable source of information.

Topics that were addressed in these interviews were the structure and possible adaptations of

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the daily meetings, how they facilitate them, the innovations that are generated through the meetings, and their personal experiences with the meetings. Examples of questions that were asked are: what is your opinion of the daily meetings? , how should the daily meeting be conducted, in your opinion? , what happens in the daily meetings? , do you still conduct the meetings in the same way as before? , how are ideas discussed in the daily meetings? .

All interviews were recorded and transcribed, and notes were taken after each interview.

Notes were taken about the content of the interview and what could have gone better in terms of interview skills. Most interviews were transcribed before the next interview was conducted in order to use the data in the next interview. However, on days on which more than one interview was conducted, additional notes were taken about the content of the interview in order to have the opportunity to use the information in the next interview.

Observations:

Observations can provide useful additional information and can add a new dimension for understanding the context of a phenomenon (Yin, 2009). To obtain information about how the daily meetings go in a real life setting, I observed approximately three of these meetings from each selected team leader. These observations made it possible to see how the structure and content of the meetings had evolved since the implementation. Moreover, it made it possible to observe if and how the teams applied the intended systematic problem solving methods during the meetings, and how and in what way the team leader participated. Field notes were made after the meetings. Furthermore, the information of the observations was used in the interviews with the team leaders in order to gain more insight in how the meetings had evolved, and their behavior during the meetings.

Documents analysis:

To obtain background information about the company s strategy, electronic documents

about the strategic direction of the company were analyzed. For instance, documents such as

internal reports about the strategic plans of the company to become more efficient and

customer-centric and reports about customer satisfaction levels were analyzed. These

documents were obtained through one of the Opex managers. Documents can provide additional

and relevant information that can complement interviews (Van Aken et al., 2012). Furthermore,

electronic documents about the goal and activities of the Operational Excellence team were

analyzed in order to obtai n information about how their activities fit in the company s strategic

direction. These documents were also obtained through one of the Opex managers and provided

information about how the team works and what they do, and contained evaluation data about

the effects of the daily meetings on the average handling time of a call at the customer service

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department during the pilot implementation, and the effects on customer satisfaction levels.

However, documents might not always be up to date or accurate and must therefore be carefully used (Yin, 2009). Taking note of this cautionary advice, the obtained information from the documents was verified with several respondents during the interviews. A total number of eight documents were obtained, two documents about the strategic plans of the company, and six about the Opex team and the effects of the daily meetings.

3.3 Data Analysis

The initial step in analyzing the data was reading the interview transcripts (Maxwell, 2005). Memos were taken during the process of data analysis as they can help to develop provisional ideas about categories and relationships, and facilitate analytical thinking (Maxwell, 2005).

The next step in analyzing the interviews was to break down and structure the data by inductively attaching open codes to fragments of the interview transcripts (Mortelmans, 2009).

This first step of coding led to codes such as negotiating , obtaining input , and explaining method . Next, axial coding was used, whereby the open codes were refined, integrated and categorized into broader themes by connecting concepts to groups of open codes (Maxwell,

; Mortelmans, . As per Maxwell s advice, categorizing and connecting strategies were both used in order to sort data into categories based on similarities, and to look for relationships that connect statements and events within a context into a coherent whole. The process of axial coding led to codes such as organizational level effects and outcomes , involving employees , and adaptation . The code book and examples from the interviews are provided in Appendix A. Furthermore, throughout the research process, continuous analysis and comparison of the data was done to stay open for any emerging new concepts and insights (Corbin & Strauss, 2007).

For the analysis of the observations, the field notes were coded by using the same codes as for the interviews. For instance, the field notes contained data about changes in topics that were discussed during the daily meetings. This data was categorized un der the code adaptations of content . Another example of data that the field notes contained was about how decisions were made during the meetings and were categorized under the code decision making .

The obtained documents contained evaluation data about the effects of the daily

meetings, this information was categorized under the code organizational level effects and

outcomes . Besides the information about the effects of the daily meetings, the obtained

documents were mainly to obtain background information and were used to verify information

during interviews.

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3.4 Ensuring Research Quality: Controllability, Reliability, and Validity

To ensure the quality of the research the most important research-oriented quality criteria will be taken into account. These criteria are controllability, reliability, and validity and provide the basis for inter-subjective agreement on research results (Van Aken et al., 2012).

To ensure the controllability of the research a clear description of the applied methodology is documented. This contains a detailed report of how the study is executed. For instance, how the respondents were selected and what questions were asked during the interviews. These measures will contribute to the controllability of the research (Van Aken et al., 2012; Corbin & Strauss, 2007).

The results of the research must also be reliable. Van Aken, Berends and Van der Bij (2012) define four potential sources of bias: the researcher, the instrument, the respondents, and the situation. A way to ensure reliability of the coding of the interviews is to check if there is inter- rater reliability. Therefore, two of the conducted interviews were coded by a friendly stranger with experience in conducting qualitative research and differences in coding were compared. As mentioned, multiple sources of data collection are used. This will ensure reliability of the instrument (Van Aken et al., 2012). To ensure reliability of the respondents a careful selection of respondents is made based on their relevance for this research. Situational reliability can be enhanced by conducted the research at different points in time (Van Aken et al., 2012). Most of the interviews are conducted at different points in time, they are however all conducted in April and May which might have influenced situational reliability. Although no issues came forward that might have threatened situational reliability it could still be possible that there were situational conditions that affected the responses of the interviewees.

The third major quality criterion for evaluation of research is validity (Van Aken et al.,

2012). Three types of validity can be distinguished: construct validity, internal validity, and

external validity. In order to achieve construct validity, all concepts will be assessed by an expert

in the field of organizational innovation. A conclusion is internally valid when alternative

explanations are ruled out (Van Aken et al., 2012). Rethinking all the possible explanations of the

observed phenomenon improved the internal validity of the research. Generalizability of the

results to other organizations, countries or situations improves the external validity. Using a

single case can negatively affect the external reliability (Van Aken et al., 2012). Since this

research used a single case, transfer of the results to other organizations, countries, or cultures

might be questionable. However, there is sufficient reason to assume that the results of this

study are generalizable to organizations operating in the same domain. Furthermore, given the

qualitative research design of this study the mode of generalization is analytical generalization

at the theoretical level (Yin, 2009).

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4. Findings

The findings chapter will be structured according to the three lenses of practice theory.

The first section will describe the array of activities that are conducted by the organizational actors to achieve innovation. The second section describes the knowledge, learning, and knowing in practice that is important for the innovation practices in this study. The third section connects the knowing and acting to the higher order, organizational level outcomes and effects of the innovations.

4.1 The Array of Innovation Activities Identified in the Case

The Opex managers get temporarily assigned to a department with a particular problem or a need for optimization. To analyze and solve a problem the Opex managers use a systematic approach which starts with the needs of the customer as central; the improvements are aimed to serve the customer in a better way. The systematic approach consists of five steps: (1) defining the problem; (2) measuring the problem, (3) analyzing the problem in order to discover the root causes, (4) improve the process, (5) evaluate the improvements and sustain the new way of working. One of the Opex managers stressed the importance of this systematic approach:

If people don t look at a problem with this method you see that, although with the best intentions and with a lot of knowledge, they go for a solution right away … as a result they keep their eyes closed for the rest of the problems … and they are unaware if they are fighting the symptoms or the root causes [of the problem].

The Opex managers do not have specific knowledge about the practices of the

departments they are assigned to and therefore need cooperation of the people actually doing

the department specific work. In order to improve they need to know how the people in that

department actually work, what skills are needed to do their job, how the business processes

run, what their challenges are, et cetera. One of the Opex managers described this as making a

blueprint of the department. The manager explained that in the first two weeks after being

assigned to a department, he just walks around to see what is going on there, asks questions

about their work, how they perform it, how the performance is being monitored, if employees

are capable to reflect on their work. Another Opex manager mentioned that at the beginning he

was constantly asking the why? question e.g., Why are you doing this? Why are you doing it

this way? Et cetera and keep being amazed by the way things go in order to get a complete

picture of all the possible problems, without already being directive towards a solution. In order

to find a problem, and consequently a proper solution, they need to delve into the situated

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practices of the particular department, learn about their routines, and make use of their practice specific knowledge. Thus, this gathering of practice specific information works as a mechanism through which innovations can be generated.

When the problem is clear, they again need the cooperation of the employees at the department. In cooperation with a group of employees of the department they then try to find a solution, a new way of doing their job, which serves the customer better and also works for the employees that actually have to work with the outcomes. Negotiation of ideas and experimenting with methods is an important part in finding a proper solution as one Opex manager put it:

You need to dare to experiment … we might think something will work, but let s just try it out. If it does not work we pull it back, if it does work we hold on to it and develop it further.

One such experiment involved an attempt to improve the Net Promoter Score of the company. The Net Promoter Score (NPS) is an important customer satisfaction measure for the company. For the company, the NPS serves as a key indicator of how customer-centric they are and therefore the company is keen to improve the NPS. Listening to customer feedback is a way to potentially improve the NPS, the obtained information can then be used to generate improvements to better serve customers. An Opex manager described a situation about when he was at the customer service department of the company and attempted to improve the NPS by using a novel and experimental way to obtain valuable customer feedback:

Together we decided to just ask the customer at the end of each call what the customer liked about it [the service] and if the customer had any advice to improve [the service] … We did not know if it would work but we just gave it a go.

In this case they were able to get immediate feedback from the customer about their performance and possible ways to improve it. This experiment acted as a mechanism to obtain valuable information which could be used to generate innovations in order to make the company more customer-centric.

Another issue the Opex managers addressed was to improve the process of handling

death claims for life insurances and make it more customer-centric. In order to process death

claims this department is dependent upon the information they receive in the notification of

death, which is registered in the Customer Relationship Management (CRM) system of the

company by employees who receive the notification from surviving relatives. These notifications

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of death were often incomplete and did not contain all the relevant information to act upon (e.g., contact person, contact information, et cetera). For instance, a death notification would sometimes only state that a customer had passed away and that the sister had called it in. The employees who then have to process such a notification have no idea who that sister is and therefore do not know who to contact for further procedures such as sending information about how the beneficiaries can collect the life insurance payments. Consequently, the process is delayed significantly because they have to put in additional effort to obtain the relevant information. For instance, they need to track down the addresses of relatives of the customer who passed away or send a letter to the address of the deceased customer and hope that surviving relatives will respond.

In order to solve this problem, the Opex manager tried to find out what the most important and necessary information is to properly process a death claim. The manager organized a brainstorm session with the employees of the department who actually have to work with the death claims to generate ideas in order to improve this process. The Opex manager explained that they facilitate the process of improvement and that they need the people from the department to come up with ideas together, in the end they reach consensus and formulate a plan for action. The Opex manager described the process as:

They [the employees of the department] come up with all kinds of ideas, some more relevant than the other, and eventually you come to plan together and try it out … that way you collaboratively search for solutions.

The brainstorm session generated a number of aspects that were vital for the process of efficiently handling death claims. Consequently, they agreed that death notifications should always contain those aspects in the future. This resulted in an improved process of handling death claims, and more important, they were able to serve customers better and faster. Thus, the collaborative process of finding a solution and achieving agreement about the most important aspects a death notification should contain acted as the mechanism through which innovation was achieved.

These findings illustrate that the Opex managers combine their process optimization

skills with the practical knowledge of the employees actually doing the work in the departments

and negotiate plans and ideas to achieve the common goal of generating a more efficient and

costumer focused way of working.

19 Creating a new tool

As illustrated above, the Opex managers need information in order to identify opportunities for optimization within a certain department. Knowing what the core activities of a department are, how much time they cost, and which skills are needed to perform these activities is vital information for them. This information enables them to assess the fit between the core activities and the resource capacity of the department. However, when the Opex managers went to different departments, they discovered that for all the departments in the company it was unclear what their core activities are, how much time they cost, which skills are needed to perform them, and if these match with their available resources. Given the importance of this information and lack of availability of it throughout the company the Opex managers decided to design a new software application tool which they call My )nsight . Employees are expected to use this tool to administer their activities. For instance, they record how much time they spend on projects, meetings, trainings, breaks, et cetera. By tracking the activities, managers gain insight in the time that is actually spent on certain activities and what the nature of these activities is and gives them the opportunity to make decisions based on this data. For example, they can see which activities are the most time consuming and might have potential for improvement, or it can be used to identify possible areas that need staff training.

The Opex managers explained that, in terms of change management, implementing the tool is a hard and delicate project which causes some resistance amongst employees. As one manager put it:

… You will get a lot of insight in what employees do, it has Big Brother is watching you aspect in it. Employees do not know what managers will do with the information … this can create fear or worries amongst employees. For instance, they might doubt the intentions of a manager when they need to use a tool like this. It is therefore very important to build trust, which takes time. That is what we are doing now, building trust and taking time … we take time to inform employees about the goal [of the tool], why we are doing it, how it fits in the strategy and direction [of the company], why it is important.

This tool serves as another mechanism to generate further innovations because it

enables insight into the practices of a department. With the information obtained through the

tool, a better fit can be achieved between the resources of a department and the customer

demand. For instance, the tool shows what percentage of working time is actually spent on

handling customer requests and how much time certain requests costs. Consequently, personnel

planning or even personnel recruitment can be more adequately adapted to changes in customer

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demand, which in turn leads to quicker handling of customer requests. In summary, the My Insight tool provides access to the specific practices of a department and the time spent on the activities they conduct. This information can be used to generate innovations that lead to more efficient and customer-centric allocation of resources.

Continuous improvement: Implementing daily meetings at the customer service department

In order to make the employees capable of further improving the organization after the Opex managers leave the department, a new organizational routine got implemented in the form of a daily team meeting at a fixed time, with a fixed structure of topics to be discussed, and with a fixed length of fifteen minutes. In these daily meetings employees can bring in ideas for further improvements with the aim of making the company more efficient and more customer-centric.

When employees signal something that can be improved they can write the ideas for improvements on a whiteboard, in the daily meetings the relevance of the ideas get discussed (e.g., why it is a problem, what is the possible root cause of it and how does it make things better), next the idea gets assigned to a certain employee who states a concrete plan for action and will then work on a solution, a date is planned for when the problem is expected to be solved, and in consecutive meetings the progress of the problem gets evaluated, ultimately the solution turns into an agreement of how they work.

For instance, an employee signaled that he got a lot of customer calls about a certain letter that is send when a customer has purchased a new insurance and judged the lack of clarity of the letter as the root cause for the calls and that the letters should be improved, the idea got discussed and the team agreed upon the relevance because they experienced the same issues with these letters. Next, the idea got assigned to someone who then stated a concrete plan for action and an expected date that the problem would be solved. He then brought up the idea to the people responsible for the unclear letters and they changed the letters. Consequently it turned into an agreement of how they work; in the future, a clearer, more customer-centric letter will be send to customers who purchase a new insurance. As a result, calls about the letter reduced. This example illustrates that by empowering and involving employees, making them think of possible organizational issues or problems in systematic way, and giving them a platform to discuss and negotiate plans and ideas, these daily meetings serve as a mechanism to facilitate a bottom-up process of generating continuous improvements for the company in their pursuit of becoming more efficient and customer-centric.

After the implementation of the daily meetings the customer service department realized

that the daily structure of the meetings, as implemented by the Opex managers did not fit well

with their activities. The turbulent external environment and stochastic offering of customer

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calls makes forecasting the workload hard and consequently, it is difficult to plan the amount of employees needed to adequately serve the customers in time. During a daily meeting, employees could not serve customers and this resulted in negative effects on the service level. This was seen as problematic since the core business of the customer service department is of course to serve customers. Having all the teams do a daily meeting of fifteen minutes, and hence be unable to serve customer calls for fifteen minutes was therefore undesirable. There was no budget to solve this problem in a different way, choices had to be made and for this reason the meetings were cut down to two meetings a week instead of every day. However, even after cutting down the number of meetings, the negative effects on the service level were still perceived as too large by the management of the department. Consequently, a further adaptation was made in order to better fit the environmental context of the department and as a result, the fixed starting time of the meetings was let go. This made it easier for the planners to schedule the meetings at times that would have the least impact on the service level and the teams were now scheduled for the meetings one week in advance.

As I was conducting my research, there were plans to further adapt the details of the meetings to make them fit better to the context of the department. When I asked the Opex managers what they thought of all the adaptations their response was clear. They believed that the meetings should also be daily for the customer service department in order to fully capture the benefits of them. The team leaders too, rather had the meetings daily instead of only two times a week at a flexible moment planned one ahead. They state that they now cannot always be present at the meetings because the timing of the meetings sometimes overlaps with other appointments. As a result it is harder for them to maintain their desired structure. One manager even questioned the legitimacy of the meetings and stated that the meetings in their current state did not have much use for his team anymore. Furthermore, some of the team leaders suggested that the reason for cutting down the frequency of the meetings might have been that it was not exactly clear for the management team that the meetings delivered hard results. It is hard to quantify factors as employee involvement or generated ideas in terms of financial benefits. Cutting down the frequency of the meetings did deliver hard results in the form of higher service level.

Not only the planning and frequency of the meetings got adapted, the structure of topics

that are discussed during the meetings changed too. At all the teams were I observed the

meetings the structure of discussed topics was slightly different than originally intended by the

Opex managers. The changes depended on the specific practices of the teams. For instance, the

team responsible for webcare has different working hours than the rest of the department (e.g.,

they work on Saturday and Sunday too) and used every first meeting of the week to discuss

issues that emerged during their weekend shift. Another team used the meetings to discuss

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work related actualities. Thus, every team made use of the meetings in slightly different ways and when I asked about it they said it just evolved like that. However, the way they dealt with problems or issues was still the same systematic way. These adaptations show that a new organizational form such as the daily meetings need time to evolve and to better fit the practices of the department and the people who have to work with them.

4.2 Knowing in Practice and Learning by Doing: Sustaining the Change

The Opex managers describe that the collaborative method of generating solutions is very important. In their view, approaching problems in a collaborative way is crucial in making the changes and improvements sustainable. When looking for solutions to customer problems they always try to involve people from the department and show them their structured methods of problem solving, guiding them to solutions in practice. Thus, they believe that making them part of the solution generation process creates a ground for a sustained implementation of improvements. Moreover, if they would try to impose a certain solution the department manager will just not accept it. As one Opex manager put it:

They [the department] need to see for themselves that it is beneficial to them, they have to be convinced based on their own beliefs … if we impose something on them it will inevitably fail … they will only do it when we are there and when we are gone they would just return to their old way of working again.

This quote illustrates the importance of involving the people from the department in generating sustainable improvements. Moreover, it shows that forcing commitment of the employees would only be a temporary solution. The employees need to be convinced based on their own beliefs that a certain problem really is a problem. Consequently, the Opex managers believe that the solution to that problem must also be one that is based on the employees own beliefs. To achieve this type of committed involvement the Opex managers try to act only as a facilitator and let the employees experience problems, and generate solutions for themselves.

One Opex explains that this is not an easy, but nonetheless very important task. The Opex manager explained how they attempt to achieve a committed involvement by the employees:

We always try to involve employees by letting them do it by themselves instead of

forcing them. So we do not say: this is the problem, this is the solution, now go

execute it. That way they would be too dependent on us, we do not want that, we

want them to see things for themselves … we therefore take the time in order for

the employees to discover and experience problems for themselves. This way they

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better understand it and really see that something is a problem that needs to be solved. Then they go and look for solutions themselves. Sometimes we know that they will get stuck two or three steps later in the process but the trick for us is then to bite our tongues and do not say that they are taking a wrong path but again let them discover it themselves.

Thus, by taking time and act as a guide or a coach instead of as someone who just tells them what to do, the Opex managers let the employees discover for themselves why something is a problem and how it can be improved so that the employees really understand it. Moreover, not only is involving employees of importance for sustaining the implemented improvements, it also serves as a mechanism to teach employees the methods of how to systematically signal and solve organizational problems. Furthermore, it is also a mechanism to make employees aware that they can change their ways of working, and ultimately, to take initiative themselves in generating further improvements to become a more customer-centric company. As one Opex manager stated:

In one of my projects I tried to really explain what we are doing … I tried to explain how you can look at customer s needs and tried to show them how we look for bottlenecks that influences the customer s needs … So I tried to give them background information about our methods so that they understand what we are doing … I think that is an important role for us, to show what methods we use, let them understand what results it can deliver, and as a result adopt a different view in how they see their work instead of doing everything just because they did it that way for the last ten years.

This quote illustrates that the Opex team wants them to learn their methods and see

problems and solutions for themselves. Hence, the team takes the time that is necessary for this

learning process and guides the employees step by step so that they can discover and experience

for themselves what the bottlenecks in the processes are and come with solutions for it. Thus,

the employees are learning in practice and in their specific work context how to find and solve

customer problems that are relevant for their day to day jobs. As a result, the changes are more

sustainable and through collaboration and learning by doing, the employees gain problem

solving skills and methodological knowledge that can be utilized for further improvements after

the Opex team leaves. One Opex manager illustrated this by stating that their ultimate success

would be to make their own team redundant.

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Through their interactions with the Opex team, employees are learning how to become more customer-centric in their ways of working. Furthermore, the Opex team is also involving team leaders who, through the interactions with Opex team, are learning how to manage and sustain the organizational conditions in which employees are given a platform to discuss customer problems, and generate solutions for these problems. For instance, the daily meetings were introduced at the customer service department as a tool to generate continuous improvements and enable employees to think of possible problems in systematic way. The meetings were first introduced as a pilot project to assess its impact. Two teams were part of this pilot project, the team leaders of these two teams got extensive training in how to effectively structure and lead these meetings. The training consisted of three parts. First, the potential benefits and advantages of the meetings were explained step by step. Second, an Opex manager conducted the first two real meetings in practice to show how it is done. Third, after these two meetings the team leader would take over and lead the meeting himself, with an Opex manager acting as a participant of the meetings in the first six weeks. By acting as a participant, the Opex manager was able to give feedback to the team leader on the meeting, and his performance as leader of the meeting. After six weeks the Opex manager stopped acting as a participant but stayed in contact with the team leader once a week to constantly evaluate the progress of the meetings and to provide support when needed. Thus, by first seeing how to conduct the meeting and next, lead the meeting himself with the aid of feedback from the Opex manager, the team leader was learning by doing in his specific practice and job context, and in the end was able to conduct and effectively lead the meetings by himself. Moreover, the team leader had access to support from the Opex manager in case advice was needed. These daily meetings, facilitated by team leaders are the organizational forms in which employees can collaboratively contribute to generating further innovations in customer services by discussing and solving customer problems, and ultimately make the company more and more customer-centric.

The learning process however did not stop there. Now that the team leader was familiar

with the meetings, he trained his team members in the same way he was taught to lead meetings

too because he believed that could benefit their personal development and increase engagement

in his team. Through the daily meetings a shared way of finding and solving customer problems

was created. When I observed at one of the meetings this became clear when an employee took

on a certain issue to solve, but did not state a plan for action and a date when the problem was

expected to be solved and thereby bypassed the shared systematic way of solving problems. This

employee immediately got questions from the group about what the plan for action was and

when the employee expected to have a solution. This illustrates the systematic way and shared

way of problem solving; this was how they do things . Thus, training the team leaders and team