Everyday innovation

How to enhance innovative working in employees and organisations

Professor Fiona Patterson, Dr Maura Kerrin, Geraldine Gatto-Roissard and Phillipa Coan

 

NESTA is the National Endowment for Science, Technology and the Arts. Our aim is to transform the UK’s capacity for innovation. We invest in early-stage companies, inform innovation policy and encourage a culture that helps innovation to flourish.

 

Executive summary

 

The imperative to promote innovative working remains strong in all sectors despite the current economic climate. However, although these aspirations exist, many working practices that promote innovation are not being readily adopted by organisations. When comparing sectors, this articularly prevalent in public sector organisations. Here, some working practices may actually inhibit innovative working.
 

Similarly, whilst the employee characteristics and behaviours that enhance innovative working (such as motivation for change, openness to ideas and original problem solving) can be clearly identified and measured, there is limited evidence that organisations are actively integrating the research evidence into corporate HR policy and practice.
 

Leadership capability, organisational culture, and organisational values are among the most important organisational factors and initiatives that enhance innovative working. Although there is a growing awareness of this, there is a persistent gap between what we know about these factors and how they are put into practice; how to enhance innovative working continues to be the most significant challenge for organisations. This report uses several practical examples to show how to promote everyday innovative working at the employee, group, leader and organisational levels. The research reported here focuses upon the critical role employee characteristics and behaviours play in innovative working and reveals the key organisational factors that enable or inhibit innovation. Most importantly, we present the practical implications regarding how to best facilitate innovative working and promote innovation in organisations. The evidence base for this research was drawn from a comprehensive review of the relevant literature, key stakeholder interviews, case studies and a UK-wide survey facilitated by the Chartered Management Institute (CMI) based on 850 responses from CMI member organisations. Innovative working remains an imperative for most organisations In the context of the current economic crisis and pressing social challenges, organizational capacity to innovate and improve productivity is becoming an imperative.
 

Results from the survey indicate that innovation is considered one of the few proactive strategies an organisation can take to regenerate growth and fight a recession. Innovative working is expected to be reinforced in the current economic climate to meet the demands of an increasingly competitive marketplace. Of the 850 responses, 78 per cent considered innovation ‘very’ or ‘extremely important’ to their organisation’s agenda in terms of products, processes or business models. There were surprisingly high levels of optimism regarding the future; 77 per cent of respondents report being ‘optimistic’ about the future of their organisation. Despite some interviewees viewing the current economic climate as a strong incentive to innovate in all aspects of their business, others report the need to focus on certain types of innovation like incremental innovation in business processes, which typically require fewer resources than more radical forms of innovation. This concurs with a third of survey respondents who expect the available resources for innovation to be significantly reduced. Importantly, the public sector was found to be less focused on promoting innovative working compared to the private and not for profit sectors. Key implications: More effective and targeted use of the scarce resources available within organisations is required. Encouraging and promoting the adoption of innovative working practices within the public sector should be a focus for the future. Motivation, openness to ideas, and original problem solving: The top three employee characteristics and behaviours for innovative working.
 

An organisation’s ability to innovate is highly dependent on the quality of its employees. Motivation for innovation, openness to ideas and original approaches to problem solving are key contributing factors to promote innovative working. Specifically, the need for self-efficacy for innovation is emphasised. However, despite this finding only 29 per cent of surveyed organisations include these factors in their selection and development practices. Our case examples illustrate how to address this practically.
 

Key implications: Organisations can do more to actively identify and develop employee attributes and employee potential for innovative working. Organisations that actively promote and reward innovation are most effective at bringing about innovation Providing ‘individual and team incentives or reward programmes that encourage innovation’ and having ‘work time devoted to developing ideas’ were reported as among the most effective initiatives for promoting innovation. Innovative organisations directly reward employee innovation and use intrinsic rewards based on recognition, status and reputation. By contrast, despite recognising a need, less than a third of our survey respondents make use of reward programmes or directly link innovation to their appraisal system. Flatter organisational structures and valuing risk taking were described as key to innovative working and were less evident in large public sector organisations.
 

Key implications: Many organizations acknowledge that innovative working should be recognised and rewarded. However, financial rewards are not necessarily the most effective policy in this area. An organisational culture that supports innovation is critical to promote innovative working, including tolerance of failure and valuing risk taking.
 

Managerial support and working practices can promote innovative working. The survey and interview results confirm that managerial support (e.g. ‘Managers provide practical support for new ideas and their application’) is a necessity for effective innovative working. Working practices vary according to the sector, although research consistently shows that managerial support is a key moderator for success. Regarding working practices in general, survey results show employees from public sector organizations citing significantly fewer working practices as conducive to innovative working compared to employees from the private sector. Interviews confirmed this finding, suggesting current ‘public sector working practices dis-incentivise innovation’. Many organisations are faced with significant barriers to innovation currently with a ‘lack of resources’ reported as the most significant obstacle of all.
 

Key implications: Innovation must be supported at all levels with managers being responsible for encouraging and reinforcing innovative working. This is particularly important in the public sector where hierarchical structures are reported as more prevalent. Public sector organizations should review current working practices that might impede innovative working in this context.
 

The role of leadership is crucial in promoting innovative working ‘Leaders modelling behaviours that encourage innovation’ was identified in the survey as one of the three top catalysts for innovative working.
 

Research literature shows that traits specifically related to the ability to lead for innovation include intellect, planning ability, problemsolving skills, and emotional intelligence.
 

In the interviews a range of key leadership characteristics and behaviours were confirmed as promoting innovation, including confidence, courage, motivation, curiosity, openness to ideas, an open style of communication, flexibility, encouragement of risk-taking, and being optimistic about the future. Of these, according to several of our interviewees, one of the most critical characteristics of leaders is their ability to encourage risk-taking. Some of the most significant challenges in facilitating innovation lie with keeping employees motivated and balancing the encouragement of risk with the necessary control when required. Public sector employees were more likely than private sector employees to list barriers to innovation that were associated with leadership e.g., ‘risk aversion and a fear of failure among leaders’ and ‘too hierarchical a structure across staff levels’. Key implications: To promote innovative working, leaders must devote specific time for developing new ideas, offering informational feedback and engaging in creative goal setting.
 

To keep innovative employees motivated, leaders should adapt a transformational leadership style (more inspiring, motivating and collaborative) to generate a shared commitment amongst employees. Organisations should incorporate specific training and development interventions into current management development programmes to promote the behaviours that enhance innovative working. Larger, public sector organisations in particular need to ensure managers/leaders are fully supportive of and trained in facilitating innovative working.
 

Innovative working in employees and organisations can be enhanced Based on the literature review, case examples and interviews, practical approaches to enhance innovative working are presented. Measurement of innovative working is identified as a key area for development for organisations. Assessment of innovation has typically focused on outputs relying on external measures such as revenue growth, with few indicators capturing innovative working. Opportunities for measuring innovative working, behaviours and performance in practice within the innovation process are provided. Case examples illustrate how information can be captured and used to direct and enhance employee innovation activities. In seeking to enhance innovative working, 60 per cent of organisations from the survey reported using leadership/management training to promote innovative working. However, it is clear that there is no off the shelf one-size-fits-all solution. Three organisational initiatives found to best predict employee level idea generation were ‘work time devoted to developing new ideas’, ‘team incentives’ and ‘induction programmes that emphasise innovation’. Our interviews and case examples suggest that the success of initiatives at enhancing innovation is highly dependent on the organisational culture and therefore a multi-pronged approach to intervention is more likely to succeed. The case studies presented provide an insight into the development of how to promote an innovative culture.
 

Key implications: Use of diagnostic metrics for innovative working can help direct opportunities for intervention. Organisations should devote more time to developing new ideas as well as introducing bespoke incentive schemes and induction programmes that promote innovation.
 

Bespoke management development activities can enhance innovative working. When introducing new initiatives, organisations are likely to need to take a multi-pronged approach to intervention that is tailored to the context.

Summary of key findings

? Skills and behaviours that contribute to innovative working in organisations can be identified and measured: Our research identifies validated psychometrics for this purpose.

? Innovative working is not an activity restricted to a ‘subset’ of people with certain characteristics: The perception that there is a special ‘sub-group’ of people who are ‘innovators’ in organisations is a misinterpretation of the research evidence in this area. Labelling employees as innovators, or not, is precarious for many reasons. Research evidence clearly shows self efficacy for innovative working (a belief and confidence in one’s ability to innovate) is a major determinant for innovation behaviour.

? Research evidence supports the proposition that innovative working/behaviours can be systematically enhanced: Although complex, the evidence indicates that it is possible to plan and implement behavioural and organizational change that significantly enhances innovative working. A ‘one-size-fits-all’ approach to promoting innovative working is not possible and a bespoke approach, following early diagnostic reviews, is most likely to succeed.

? Government and corporate policymakers have an important role in promoting innovative working in the UK: Policymakers can play a role in integrating research findings on the characteristics and behaviours that support innovative working into policy initiatives.