Failure or Success - A Matter of Perspective
Innovation, particularly radical innovation and the generation of new knowledge and IC, is a very risky business. A strong brand may be affected by aggressive competition of another or loss of popularity if the organization fails to promote and enhance it. Research capability, no matter how robust, may fail to deliver a breakthrough invention. Intellectual property rights may be rendered less effective by litigation, infringement, or misuse. Still, to be risk averse may not be a choice of business mediocrity versus excellence but to some may be a choice of death over life. Part of encouraging risk taking is not to penalize, even by stigmatizing, failures by employees. A risk-taking culture should at least encourage an attitude of open-mindedness by management - an open-mindedness that may extend for as long as five years as in the following example from 3M. Research scientist Dr. Spence Silver's attempt to invent a strong adhesive initially failed, and instead he invented adhesive spheres that would not dissolve though still very sticky. For years Silver presented seminars throughout 3M in search for product concepts for his technology. 3M did not kill the invention and allowed it to survive for five years when Mr. Fry, a new product development researcher, attended one of Silver's seminars and came up with what became known as the Post-It Note. Initial market research indicated that the new product, Post-It Notes, would be a commercial failure. But the entrepreneurial spirit and risk-taking cultural values cultivated by 3M prevailed. The two managers responsible for the launching decision visited a number of stationery retailers and were convinced, despite negative market research reports, that the new product had a chance. The result was a $384 million business that continues to grow.17 But cultural change is not easy. In most cases, it is hard to discern with sufficient clarity the existing values embedded in the culture of an organization. Without such an understanding it is hard to see how such values can be changed.
One way to change culture is by effecting changes to the job design wherein knowledge sharing is incorporated as part of everyone's job, as explained in Chapters 5, 7, and 8. Incorporating knowledge sharing, idea submission, and teamwork in the reward and compensation systems of the organization propagates this further. This, however, is not enough; if the implicit values are not made explicit it may be impossible to change them, particularly where the adverse implicit values are those adopted by senior and middle management. In such a case, the organization has to change implicit patterns that are entrenched deeply in its identity. That can only be possible by uncovering these implicit patterns, and comparing the values of management/leadership and the rest of the organization.
To deal with this, Brian Hall of Values Technology suggests going through a value audit. Hall applied his study of the effect of human values on human behavior to organizational cultural values and behavior.18 He found that although 125 values underpin all human behavior, an individual lives with about 20 and operates on about a third of these on a daily basis. These values change according to the stage of human development, which Hall divides into seven stages. Hall explains that organizational culture is affected by the same set of values reflected in the collective values of employees and the stage of development of the organizational vision and evolution.
For an organization to create and extract value from its IC, Hall explains, an organization must be functioning on values that stem from stages three and four at the least. Stage three values include belonging to a group, communication, workmanship, art, and membership. Operating at this level, an organizational culture will promote collaboration and knowledge sharing by stressing the value of belonging to a group, undermining the role of individual creativity and self-initiation. The emphasis on creativity, self-assertion, sharing, trust, and collaboration are values stemming from stages five and six of an organization's development. Organizations at these two stages of development are able to create and utilize knowledge not only in their field of operation but other fields as well, depending on the initiative and creativity of their employees. Hall demonstrates how adoption of values at a particular stage affects the leadership, and hence management style and the administration structure as a whole. Conflict and misalignment between leadership and employees' values would result whenever they operate from different stages, particularly when such stages are further apart.19 Hall explains that a leader with stage-six values will usually expect self-initiated collaboration when entrusting a specific task to an employee. If that employee operates on values of stage three, for example, then he or she will need permission before speaking to others or initiating any decisions. Eventually, this would result in loss of productivity and confusion as to what is the accepted behavioral pattern. Only by making these values explicit, as well as exposing their quality, is it possible to consciously address, change, and align them to the organizational vision. A cultural audit is therefore included as part of the CICM model as well as steps to formulate the organizational vision. To that we now turn.
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