Introduction When people hear the word innovation they usually think of invention and creativity.

While this way of thinking is not incorrect, it is more accurate to look at it from the perspective that innovation is in fact being creative and inventive and taking the outcomes of the creativity process and turning these ideas into useful products or work models. In this essay I will be looking at how innovation is often regarded as the lifeblood of an organisation. 87% of people that were surveyed from the Boston Consulting Group believe that innovation is essential to the success of an organisation. The question now is, how can managers stimulate innovation within an organisation? I will be addressing this by looking at three variables within an organisation that a manger can manipulate Structural, human resource and cultural variables. There are many different definitions of innovation, where Kuczmarski (1996, p.7) states a simple definition of innovation being A new idea, method or device; a novelty. However, this simplistic and broad definition does not help managers and employees understand the characteristics of innovation and how they can manipulate the variables to stimulate innovation. If we look at an organisation that is culture orientated, we can define innovation as a social process, as Goffin and Mitchell (2010, p.8) state that innovation in a cultural context is the intentional introduction and application within a role, group or organisation of ideas, processes, products or procedures, new to the relevant unit of adoption, design to significantly benefit the organisation or wider society.

Lifeblood Peter Drucker, a famous writer and management consultant says that The business enterprise has two-and only two-basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. I strongly believe that innovation is the lifeblood of an organisation, especially in the Figure 1.1 dynamic business environment of the 21st century where companies strive to gain a competitive advantage over their competitors. An innovative company like Apple is continuously innovating and launching new products that allow the company to create value and grow, thus, their innovative products serves as the lifeblood to their organisation. As figure 1.1 shows, Apple have a cash balance in the first quarter of 2012 of $96.7 billion. A successful company like Apple can use this cash to invest in R&D in order for them to come up with new innovative products that will generate more revenue for the firm. New innovations at Apple serve as the lifeblood to their organisation. This notion is further developed by Khan and AlAnsari (2005) with their theories being that innovation serves as the lifeblood of many organisations whose survival and growth depend on developing new technology, products and services.

Many organisations have their core business strategy as cost-cutting, but is this a suitable strategy for gaining a competitive advantage? Kuczmarski and Thomas (1996) state that the cost cutting days are over, reducing our workforce and decreasing our unit costs (in most cases) is limited. Having said this, it is now evident that a company pursuing to be competitive must have innovation as its core business strategy. Such companies like Apple as mentioned before, 3M and Kellogg have gained reputations as innovators as they view new products as their core business strategies and not just something they do second. If we look at the statement innovation is often regarded as the lifeblood of an organisation in a different context, for example, in a fast paced production environment were a manager is usually always on the factory floor, he or she will have virtually no time to be imaginative or creative. Even if they do have the time to sit down and draw up imaginative ideas, research shows that managers are interrupted every nine minutes, thus making it even harder for them to be innovative (University of Oklahoma). Organisations like Facebook, were innovation is their lifeblood, time is reserved each day were creativity and imagination are encouraged and seen as paramount to the organisation because it is this creativity and innovation that differentiates them, giving them that competitive advantage. At Facebook, part of the innovative process involves cutting loose and having fun (Robbins, DeCenzo and Coulter, 2011).

Variables An innovative organisation needs to foster the appropriate environment in order for innovative ideas to be stimulated. In this section I am going to explain how a manager can stimulate innovation by using the variables that are encompassed in an innovative organisation. The three variables that I will be focusing on are structural, human resource and cultural variables. As you can see from figure 1.2, there are a number of different subdimensions to each of these three variables. I will now take each of these variables in turn and explain what I think are the two most important sub-dimensions to each.
Figure 1.2

Structural Variables Organic Structures An organisation that has an organic structure is the best environment that a manager can be in to stimulate innovation. Within this type of structure, the organisation will change to adapt to the environment it is in. Organic structures are characterised by some important factors that stimulate innovation, such as decentralisation, multidirectional communication, limited rules

and regulations and most importantly encouraging employee participation in problem solving and decision-making, interactively in groups. Prakash et al. (2008, p.55) state that this type of structure within an organisation not only shapes innovations, but plays a more active role in the successful implementation of innovations. A study carried out by Prakash et al. (2008) contains some significant findings and a number of hypothesis tests that state Centralisation has negative relationship with innovation and Participation in decision-making has positive relationship with innovation. These findings further enhance the idea that a manager can stimulate innovation by promoting an organically structured organisation. An organisation where decision making is dispersed down the hierarchy in order to promote democratic decision-making and empowering lower level employees to create and suggest new ideas will facilitate the innovation process. Time Pressure In reality, most organisations do not have the luxury of competing in environments where time pressure is of no concern. Professors from the Harvard Business School have documented in-depth research that suggests overall, very high levels of time pressure should be avoided if you want to foster creativity on a consistent basis (Amabile et al., 2002). Therefore managers have to try and manipulate an organisations structure in a way that time pressure and time constraints do not deter their employees from being creative and innovative. So how can a manger go about doing this? A Manger must stress the importance of creativity to their employees, even when time pressure is a factor. This can be a complex task for a manger because all people react differently to being under pressure, where some people may be more creative and come up with more ideas under pressure; others may not work well at all in a pressured situation. Time pressure can therefore be seen as a barrier to creativity and so managers should try to reduce this constraint in order to relax their employees from being under pressure if it is going to hinder the creative process. An interesting methodology for this is that managers should give people a sense of being on a mission, doing something difficult but important (Amabile et al., 2002).

Human Resource Variables High commitment to training and development For a manager to stimulate innovation through human resources, they must be committed to providing their employees with high quality and regular training in order for them to sustain their skills and creative abilities. Von Stamm (2008, p.478) states a very good theory that suggests if managers want to continue to stimulate innovation among their employees, they must be dedicated to providing them with the skills to be innovative. She states that the establishment of a subsidiary to provide creativity and innovation training services demonstrates the commitment an organisation has to its employees for them to be creative and innovative. Research has suggested (Silva, 2010) that managers who are committed to training-focused HR practices are associated with higher innovative performance. For example, a fieldwork study carried out at Intel in the nineties argues that, if management are committed to high levels of staff training, in Intels case, superior technological learning performance comes

from better HR practices to develop firm specific human capital and deploy it into learning activities, they can keep their staff current and up to date with new technological changes. This means that Intels staff can continue to be creative by implementing new technology into their products. Creative People While certain people are more creative on their own than others, creativity should be encouraged by the manager to all of his or her employees because without their employees having a creative outlook then there is no way the manager can expect to receive ideas that can be implemented into innovative products. When a manager wants to stimulate innovation, they need to stress the importance of the role of creative people in the innovation process. A manager can do this by encouraging their employees to become idea champions. These idea champions are defined as individuals who actively and enthusiastically support new ideas, build support, overcome resistance, and ensure that the innovations are implemented (Robbins, DeCenzo and Coulter, 2011). These people provide a building block for creative ideas to be successfully implemented through their personalities, in the way that they are highly persistent and energetic along with being able to imprint their visions of potential innovative ideas to other members of staff in the organisation. So having said this, then surely if a manager can encourage their staff to become idea champions, then they can use these people to stimulate innovation.

Cultural Variables Ahmed and Pervaiz (1998, p.30) argue that the possession of positive cultural characteristics provides the organisation with necessary ingredients to innovate. Therefore a manager needs to promote a positive culture within the organisation in order to stimulate innovation. Low external controls For innovation to be stimulated, management should try and keep rules and regulations at a minimum. If there are rigid rules that define an organisations culture, then it can prevent innovation by taking creativity and risk out of the organisation and therefore communicating inappropriate messages to employees (OSullivan and Dooley, 2009). If the external controls of an organisation are too stringent then employees will simply not engage in creative activities as they do not see the value of doing this and will just continue to function with the organisations existing practices and maintain the status quo. Tolerance of risk Management need to make clear to their staff to what extent the can undertake risky activities. By doing this the employees will be conscious about the space within which they are allowed to act in an empowered manner. Ahmed (1998, p.39) states the observation that relates to my previous point in that The best way for leaders to define the action space, is not

to be so precise as to discourage innovation, but to stipulate a broad direction which is consistent and clear. Even the most creative employees can encounter failures in the innovation process. Therefore, when these failures occur, managers should not criticise the employees because this runs the risk of deterring them from undertaking creative activities in the future. So if the manager wants to stimulate innovation then they must define the tolerance of risk and failures as part of the organisations culture. An example of an organization were the tolerance of risk is part of their culture is at Johnson and Johnson where enshrined in the founders maxim, failure is an important product.

Proctor and Gamble (P&G) An innovative company William Procter, a candle maker, and James Gamble, a soap maker, formed this global and Fortune 500 Corporation in 1837. Since then, P&G has capitalised on innovation and creativity to lead the consumer and household product industry today. Some of their most popular brands today include Gillette, Olay, Old Spice, Puma and Pampers, to name just a few. From their corporate section of their website, they state that Innovation is a key driver of P&Gs return to profitable share growth over the last several years. It remains the lifeblood of the company and our innovation pipeline is strong. This quote fits in perfectly with our question that innovation is often regarded as the lifeblood of an organisation, where P&G have proven this to be the case as innovation is the lifeblood to their growth and success. Their recent innovations in 2010 were the successful Breakthrough launches such as Fusion ProGlide and Papers DryMax (pg, 2010). At P&G they have manipulated the different variables in order to foster innovation. Structural Variables At P&G they have manipulated a structure which has removed many of the overlaps and inefficiencies that exist in many large companies. Using this structure, we continue to see faster global expansion of new innovations (pg, 2011). P&G have aided their rapid growth by using a structure that has allowed them to tap the benefits of a global organisation with speed and efficiency. Human Resource Variables By using human resources, P&G have been able stimulate innovation through successful training programmes which teaches employees how to manage the innovation process and worldwide electronic communications systems allows them to share knowledge (Lafley and Charan, 2008). P&G understand the importance of investing in R&D programmes and from their website they state that P&G fosters innovation by employing more than 7,500 scientists at 22 research centres in 12 countries and investing 4 percent of sales in R&D. R&D rewards

employees for their contribution through financial compensation, promotion, and the freedom to influence project selection (pg, 2010). Cultural Variables Since A.G. Lafley became chief executive officer in 2000, the leaders of P&G have worked hard to make innovation part of the daily routine and to establish an innovation culture. In recent years P&G have adapted a new way of thinking The Game-Changer which involved designing a social system that would spark new ideas and enable critical decisions. At P&G they have adopted a culture where they maintain an open work system in a lot of places around the world, for example Executives offices dont have doors. Leaders dont have a secretary cordoning them off. All the offices on the executive floor at Procter & Gamble are open; the conference room is an open, round space ( Lafley and Charan, 2008). This new system allows staff to openly share ideas with senior staff in the easiest possible manner because the new culture has limited the barriers to communicate ideas. A.G. Lafley believes that Once people have succeeded at innovation, you can see the energy in the company changing. People routinely say, We can do this. This is feasible. The attitude changes are incredible to watch; once people see the simplicity, durability, and sustainability of an innovative mind-set, it continually reinforces itself.

Conclusion Clearly, innovation has to be stimulated by a number of the three variables I have mentioned. Innovation has to stem from the creativity process and the successful implementation of these creative ideas will lead to a successful innovative product or work model. From examining whether innovation is the lifeblood of an organisation or not, it is evident that this is definitely the case in todays dynamic business environment. It is clear that organisations need to have innovation as their core business strategy and you only have to take a look at a company like Apple where they have differentiated themselves through innovation, allowing them to have that cash balance of $96.7 billion, even in tough economic times like the present. In order for an organisation to be innovative, they must ask themselves the question how can we set up the best possible working environment in order to foster innovation? Therefore, management must think about the structural, human resource and cultural variables they can implement in order to stimulate innovation. The manager must encourage an organic-type organisation structure and need to have the desire to drive their staff in the direction that encourages them to think creatively and outside of the box to stimulate innovation. Ultimately I think that if a manager can imprint innovation as the organisations core strategy into their employees, the employees will begin to perform their everyday tasks looking through a new lens. Staff will then carry out their expected tasks as normal but their mindsets will be set in a new direction that will allow them to look for new ideas and innovative ways to help the organisation improve their operations and hopefully increase the profit of the organisation.

References Ahmed and Pervaiz. (1998). Culture and Climate for Innovation. European Journal of Innovation Management. 1 (1), pp. 30-43. Amabile, Mueller, Simpson, Hadley, Fleming. (2002). Time Pressure and Creativity in Organizations: A Longitudinal Field Study. Harvard Business Review. 11 (1) pp. 1-23. Bettina Von Stamm (2008). Managing Innovation, Design and Creativity. 2nd ed. United Kingdom: John Wiley & Son. Pp. 478. Goffin, K and Mitchell, R (2010). Innovation Management: Strategy and Implementation Using the Pentathlon Framework. 2nd ed. United Kingdom: Palgrave Macmillan. pp. 8 Khan, M and Al-Ansari, M. (2005) Sustainable innovation as a Corporate Strategy. Intellectual Assets Management. 5 (1), pp. 1-7. Kuczmarski, T. (1996). What is innovation? The art of welcoming risk. The journal of Consumer Marketing. 13, pp. 7-11 Lafley and Charan. (2010). The Game Changer: How Every Leader Can Drive Everyday Innovation. New York: Crown Business. Pp. 224-229. OSullivan and Dooley. (2008). Applying Innovation. California: Sage. Pp. 43. Prakash, Yamini, Gupta, Meenakshi. (2008). Exploring the relationship between organisation structure and perceived innovation on the manufacturing sector of India. Singapore Management Review. 30 (1), pp. 55-76. Robbins S, DeCenzo D, Coulter, M (2010). Fundamentals of Management. 7th ed. Pearson: Essex. Pp. 230-233. Silva, A. (2010). The Importance of Human Resources to the Innovative Capacity of Portuguese Firms. Editorial Novembro. 2 (1), pp. 2-18.

Proctor and Gamble Website www.pg.com