Concept definition
Organizational culture can be defined as a set of values and beliefs that are shared by the employees of an organization. The role of the culture in the organization in fostering creativity and innovation can be seen as a contributing factor, which contains several determinants. In Martins and Terblanche (2003) the determinants of the organizational culture that influence creativity and innovation were found to be related to the following areas:
- Strategy
- Structure
- Support Mechanisms
- Encouraging behavior
- Communication
Each of the aforementioned areas contains a set of conditions that should be met to promote creativity and innovation, as “creativity and innovation will flourish only under the right circumstances in an organization” (Martins and Terblanche 73). In that regard, as the aforementioned determinants can promote innovation and creativity, they can also inhibit them. Accordingly, the main elements of the organizational culture influence creativity and innovation in two forms, which are the socialization processes, e.g. making assumptions and learning, and enactment in established forms, e.g. structures, policies, management practices, etc (Martins and Terblanche 68).
Article Discussion
The article “How to Build a Culture of Innovation” by Jessie Scanlon described the process of building a culture that promotes creativity and innovation inside Tata Group, India’s largest business group, based in Mumbai. The process of transforming the culture in the company has taken several processes. The first process involved “establishing formal systems for encouraging innovative thinking and processing of ideas” (Scanlon). The process of formalization of innovation encouragement included training managers to direct employees’ ideas and the inclusion of innovation as one of the categories through which the employee is annually evaluated. The second process is less formal and implies stimulating innovative thinking. The latter can be seen in giving the employees time and a space that can be used for personal objects.
It’s not that there had been no innovation inside Tata Group, the 117-year-old Indian powerhouse responsible for that nation’s first steel mill, power plant, and airline, among other achievements. But when India’s long protected economy was opened in 1991, Chairman Ratan Tata decided that for his companies to survive and thrive in a global economy he had to make innovation a priority—and build it into the DNA of the Tata group so that every employee at every company might think and act like an innovator.
Today those 15 companies have produced such innovative products as the $2,000 Tata Nano car and include firms such as Tata Consultancy Services (TCS), the Mumbai-based IT services, and outsourcing power, which earned almost $6 billion in revenues in 2008.
The TCS Strategy
Cultural transformation is impossible without the leadership of top executives, so Tata created the Tata Group Innovation Forum (TGIF), a 12-member panel of senior Tata Group executives and some CEOs of independently run companies. “TGIF’s main objective is to inspire and share best practices,” says Sunil Sinha, CEO of Tata Quality Management Services and a member of the forum. But executives also have employed other strategies to build a culture of innovation. Here’s how they did so within TCS.
First, leaders approached the challenge both top-down and bottom-up. TCS Chief Technology Officer Ananth Krishnan says this involved establishing formal systems for encouraging innovative thinking and processing of ideas. “If I come up with an innovation, whether it’s an incremental or a disruptive idea, I need to know whom to go to with it, and there needs to be an organizational process for moving it forward,” says Krishnan.
TCS created multiple channels, and managers are trained how to direct an employee’s idea: incremental innovations are handled and funded by the business unit in which the idea originated; platform-level innovations that might extend an existing offering are directed to one of the company’s 19 global innovation labs, leading-edge research centers focused on specific technology areas or business sectors. Disruptive ideas tend to originate in the labs, but if one emerged from a business unit it would be directed to a lab or funded through an incubator fund run by the CTO’s office. How all of the ideas are evaluated and funded is almost less important than the fact that TCS employees know ideas are welcome—and that good one won’t die in a pile on someone’s desk.
TCS has also incorporated innovation into its formal annual review process, making it one of the nine categories on which employees are evaluated. If an employee wins the company’s Young Innovator Award, he or she will see more than a salary bump. “It certainly accelerates your career track,” says Krishnan. “I might pluck you up and put you in one of our innovation labs.”
Creative Dissatisfaction
In addition to formal systems, TCS takes steps to stimulate innovative thinking. “We train people to think about improvement all of the time, to have what I call a culture of creative dissatisfaction with the status quo,” says Krishnan. TCS has made innovation a component of training programs, from its leadership institute, to which 50 senior managers are sent every year, to its four-day “Technovator” workshop, at which its programmers are taught to think creatively.
Five hours of an employee’s 45-hour week can be used for personal projects, such as learning a skill or developing an idea. To better capture nascent ideas, the company launched IdeaMax, a Digg-like social network that lets any employee submit, comment, and vote on ideas. Since it was launched last year, IdeaMax has collected 12,000 ideas, several hundred of which have become projects. “Every quarter, I review the top 10 most popular ideas,” says Krishnan. “The wisdom of crowds works for us.”
The company says it has been steadily meeting its innovation goals. Last year 10% of revenues were directly traceable to innovation activity, says Krishnan. TCS also has set goals for customer recognition of its innovations. “When we launched our innovation initiative three years ago, we said one-third of customers must be able to recount an innovative element of their project,” he says. “Now we’ve raised that to one half. Is that enough? I don’t know. Maybe we should raise it again.”
Critical evaluation
It can be seen that largely all the elements of the way culture interacts with creativity and innovation are present in the article. It can be seen that the way culture influence creativity is formalized in the company, and thus, there is no need for the employees to make assumptions on whether creative behavior is accepted or not. Accordingly, the determinants outlined previously are all present, although communication is not explicitly stated. However, it can be assumed that IdeaMax, an initiative launched by Tata Group, in which employees have the opportunity to “submit, comment, and vote on ideas” (Scanlon), is a representation of open communication in organizational culture that promotes creativity. In terms of other determinants, it can be stated that they are fulfilled almost identically, where the strategy of the organization, its structure, support mechanisms, and encouraging behavior can be paralleled to those established in Martins and Terblanche’s study.