NORMS PROMOTING CREATIVITY AND INNOVATION IN SMALL AND MEDIUM ENTERPRISES

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1 NORMS PROMOTING CREATIVITY AND INNOVATION IN SMALL AND MEDIUM ENTERPRISES Ľubica Lesáková Faculty of Economics, Matej Bel University, Tajovského St. 10, Banská Bystrica, Slovak Republik, Abstract Organizational culture plays an important role in supporting the creative processes, because it can promote or hinder innovation-enhancing norms. Innovative small and medium enterprises tend to develop culture, which emphasize and reward values and norms that support the generation and implementation of new ideas. Such a system encourages everyone in enterprise to develop original and useful proposals. They promote innovative ways of solving problems and finding solutions. Over the years, researchers have documented a variety of norms that promote consistently creativity and innovation in organizational settings. The aim of the article is to present the organizational culture, especially the innovation-enhancing norms, as important elements, that promote creativity and innovation in small and medium enterprises. The paper was elaborated a sa part of VEGA project 1/0654/11 Innovative Small and Medium Enterprises as a Part of Knowledge-Based Economy in the SR. Key words: small and medium enterprises, organizational culture, behavioral norms, creativity, innovation. 1. Introduction There are many driving forces that promote creativity and innovation in enterprises. In the last decade managers and theorists started to recognize, that one of the main driving forces behind creativity and innovation, is the organizational culture, especially the innovation-enhancing norms that promote creativity and innovation ( Andriopoulos C., Dawson P., 2010). It can be stated, that the components of organizational culture (shared values, beliefs and behavioral norms) are key in promoting the generation and implementation of new and useful ideas. In accordance with shared norms, staff will decide on wheater creative and innovative behaviour is a part of the internal environment in which small and medium enterprises operate. Moreover, the dominant values, beliefs and behavioral norms, which are incorporated in the management practices of the small and medium enterprises, may directly or indirectly support or hinder creativity and innovation in the workplace. Innovative small and medium enterprises tend to develop culture, which emphasize and reward values and norms that support the generation and implementation of new ideas. Such a systems encourage everyone in enterprise to develop original and useful proposals. They promote innovative ways of solving 44

2 problems and finding solutions. Innovative enterprises value flexibility, mobilize freedom within the work setting and encourage co-operative team work. These are important in promoting the creativity and innovation. The aim of the paper is to present the organizational culture, especially the innovation-enhancing norms, as an important elements, that promote creativity and innovation in small and medium enterprises. The paper was elaborated a sa part of VEGA project 1/0654/11 Innovative small and medium enterprises as a part of knowledge-based economy in the SR. 2. Norms promoting creativity and innovation Innovation usually involves risk taking, nonstandard solutions and unconventional teamwork practices (elements that are not easily managed by formal control systems). The effective management of culture is critical in mobilizing organizational creativity and innovation. Crutial in this efforts is the establishment and continuous encouragement of behavioural norms that promote the generation and implementation of new solutions. These norms refer to the socially created expectations that guide the acceptance of attitudes and behaviour in the work setting ( Grieves J., 2010,). Over the years, researchers have documented a variety of norms that promote consistently creativity and innovation in oganizational settings. Main of these norms are discusses in more detail below. It may sound obvious, but promoting behaviour, which supports idea generating, is a key for mobilizing creativity in the work. Managers building the creative environment need to promote open communication and forum of intra- and extra-organizational debate. Sustaining such an information flow is crutial. Lack of information hinders creativity in organizational settings; building organizational culture needs to encourage open discussion, constructive conflict, fair evaluation of ideas and fast approvals ( Bessant J., Tidd J., 2009). All this of course, needs to happen in a positive cooperative atmosphere, because conflict across enterprise could bring the opposite results. Creativity is promoted in such an environment, where continuous learning is a firm-wide expectation. Employees should have a continuously curious attitude; this will allow them to discover and explore new ideas and potentially identify new and valuable solutions. Keeping staff s knowledge and skills up to date, is a key in this respect. The creative process often involves a risk taking. The generation of ideas requires experimentation and, as such, taking risks is usually unavoidable (and often necessary). Encouraging risk taking behaviour needs therefore to be a part of the creative culture. To mobilize and encourage risk taking, managers need to avoid applying too many controls in the creative process, because it may likely to stop experimentation and to slow down creative flow. However, creative small and medium enterprises have to face a commercial reality, because excessive risk taking may lead to costly results on profit and loss account. Experimentation and risk taking may lead to mistakes. Mistakes are therefore an everyday practice in creative environment. Supporting a culture that tolerates mistakes and handles them effectively, is important in encouraging staff to 45

3 think and act creatively. Creative enterprises need to have faith in their employees to try new things, even if this leads to failure or disappointing results. Enterprises, that punish employee mistake, discourage creativity and inhibit innovation. Creative small and medium enterprises need therefore to acknowledge failure and constantly create opportunities to openly discuss mistakes and learn from the falls of the creative process. The successful management of mistakes often relies on manager s skills to clarify which mistakes are acceptable and which are not. Positive examples confirm, that behaviour that is promoting change in the work setting may influence positively organizational creativity and innovation. To support creativity, the culture must tolerate uncertainty, promote and reward positive attitudes towards change and encourage employees to change constantly the status quo and explore new ways of finding creative solutions ( Monch A., 2006). Change and constant experimentation may likely lead in the workplace to conflict; conflict between colleagues, conflict between departments, conflict between individual s creative freedom and the constraints set by the client s commercial reality. Managers in creative enterprises often complain about handling a conflict between the creatives and the non-creatives. This is the reason why many creative enterprises try to employ managers with technical as well as business experience with the aim to overcome the gap between these two disciplines. The literature suggests that enterprises need to expect and tolerate conflict and handle it effectively in order to support creative behaviour in the worksetting. As the starting point of creativity often comes out from individual expression; it is important to acknowledge and to be sensitive to different styles of working. At the same time, managers need to train employees in the process of constructive confrontation in order to promote constructive feedback and an open, supportive culture in the workplace. 3. Norms promoting implementation of innovative ideas Though creativity is important, commercial reality requires implementation; ideas need to be turned into innovations that will positively influence the corporate profit. In order to encourage action, several norms are important. The main norms are: an emphasis on team work and effective group functioning, a focus on speed and urgency, a need for flexibility and adaptability and a sence of autonomy (Walmsley B., 2009). The need for team work and effective group functioning is common in creative environment. Depending on the enterprise, teams may be fixed for each project, or staff may join different teams depending on the nature of the project. Staff may join different teams in order to promote a new perspective and encourage emploees to utilize their work capabilities and interpersonal skills. Employees need to be encouraged to work and communicate effectively. Implementation is successful when teams work harmoniously, communicate well and have common goals (Lesáková L. et al., 2009b). Promoting behaviours that support speed and urgency is important for quick translating ideas into innovations. After the initial experimentation stage, 46

4 which is a key in generating creative outputs, decisions need to be made quickly. Norms like speed, a sence of urgency and commitment to achieving deadlines (even if teams need to work long hours to achieve their goals) are also important. It seems that creativeness and the williness to discover and to deliver something new and novel, drive people to excel and redefines acceptable working hours. Promoting flexibility and adaptability in the workplace is a key factor in supporting implementation. The constructive confrontation in the creative process requires from staff to be open minded and flexible in their thinking. Changing the status quo and the way in which things can be done in a different way, is important for generating new solutions. Employees need to be perpetually challenged; this requires from employees strong characters that can constantly deal with change and cope with the inevitable conflict. Sustaining a sence of autonomy in the workplace is also important in promoting implementation in the work setting. Individuals need to be autonomous and take action without being asked to do so. This does not only promote the generation of new ideas, but also the quick implementation of valuable concepts. Developing a culture for creativity and innovation requires from managers to support perpetualy the generation and implementation of ideas in the workplace. This requires that managers avoid in the managerial work some mistakes (Monch A., 2006). Despite the fact, that innovation requires autonomy and personal initiative, overemphasizing individual accountability can be detrimental to the creative process. Though to staff has to be to given individual targets and has to be evaluated against their achieved outcomes, overemphasizing individual accountability can create a climate of fear and may discourage employees from taking the risks. It also goes against the requirement for open communication, constructive feedback and the necessity of an open learning culture. Moreover, though individual performance appraisals serve as essential human resource management tools, they need to be carefully implemented and not promote a risk averse culture. Though enterprises need to consider also financial constraints, overemphasizing quantitative goals and financial budgets rarely promotes a culture of perpetual discovery and innovation. Objectives and financial constraints will certainly set the frame, in which the creative process will be initiated, but employees also need to be encouraged to act outside the firm and, if necessary, negotiate with the client or their company for exta resources. The way how enterprises handle the inevitable mistakes can increase or constrain creative processes at work. Punishing mistakes is a common fall in business environments; it creates a culture of fear and hinders organizational creativity. Managers need to acknowledge mistakes as part of the learning experience. Creative thinking involves (often long) trial-and-error processes and punishing mistakes can be detrimental to the generation of new ideas. Enterprises that are innovation driven, tend to promote a forgiveness culture ( Berchicci L., 47

5 2009). Such a managerial attitude mobilizes an action across the enterprise, where people focus on doing things rather than on hesitating because of fear of failure. Promoting internal competition is often used as a mean for mobilizing initiative within a work settings. However, innovation usually entails collaboration across intra- or extra-organizational boundaries. Consequently, promoting internal competition may hinder effective team working and stimulate organizational politicking that may be detrimental to the creative process. Though managers increasingly acknowledge the value of creativity and innovation as a means of developing and sustaining competitive advantage, paradoxically, many enterprises strive to be the same as their competitors. They use similar processes, generate similar products and avoid the implementation of risky novel ideas and practices. Innovation requires managers to be different, because the profit from successful innovations is far greater than that achieved through imitation. 4. Principles of creativity and innovation Organizational culture is important determinant of organizational creativity and innovation. Several authors have proposed principles, that enterprises should follow in order to build and sustain a culture that promotes the generation and implementation of new ideas and novel outcomes ( Beerel A., 2009, Grieves J., 2010). Building of an innovative culture requires creating an environment of faith and trust, in which good ideas have a chance to become great products. Truly innovative companies maintain creativity and innovation as a key corporate priority. Rather than focusing on safe ready made solutions, visionary managers see and continuously support the world of discovery and the fact that innovation helps to increase profitability (Lesáková L., 2009a). Be truly experimental in all parts of the businesss process is a critical part of the creative process. Especially in the early stages of creative discovery, encouraging employees in creative endeavours and taking sensible risk, is important. Creative employees need to be constantly challenged and highly experimental work can help in this respect. Building close relationships between marketing and technical people. Promoting close and meaningful relationships between the technical innovators and the marketing people is another essential principle for promoting a culture of creativity and change. Although such arrangements may create some conflict, open communication and constructive criticism between marketing and technical people is critical. Some authors encourage enterprises to bring together these two functions formally and informally ( Andriopoulos C., Dawson P., 2010). Such a relationship does not solve the traditional tensions between cost control and experimentation, but also helps to provide a balance between the ideas of creative discovery and the concept of feasibility. Building customer intimacy. The commercial reality requires from enterprises to anticipate and to meet market driven requirements. Innovative enterprises achieve the customer intimacy by observing potential users, videotaping 48

6 their actions, interviewing key stakeholders and studying customer s lifestyles and product decisions. They also increasingly employ sociologists, antropologists, who are becoming part of the creative process; larger enterprises increasingly employ them as full-time staff, while smaller firms often subcontract their services. Being creative in enterprises should not be a privilege of selected few employees. Visionary leaders try to engage the whole enterprise in generating and implementing new solutions. Creating a sense of community, where everyone works to achieve a common goal and beliefs in the value of discovery and innovation, is critical. This is organized both formally and informally. Formally, through planned communication activities such as: regular meetings motivating staff and providing opportunities for feedback, through s celebrating achievements, through internet that bring the employees together. Informally, by leading by example, initiating social get togethers, engaging staff in discussions and others (Berchicci L., 2009). Acknowledging the individual, providing opportunities for personal expression and encouraging employees to work on challenging projects, that all is important in mobilizing culture of creativity and innovation. Innovative companies create a fun working environment and support employees in achieving their ambitions. A key principle for fostering creative culture in enterprises is a collaborative approach to management, in which employees are constantly aware of the company s actions and are able to present their views and opinions in numerous formal and informal occasions. Creating a no fear climate and culture that supports experimentation is essential in mobilizing innovation-enhancing behaviour. The fair of failure can be detrimental to organizational creativity. Creating a system that supports individuals in their creative endeavours helps to foster a no fear climate in the workplace. 5. Conclusion The concept of organizational culture is one of the widely researched management topics. Culture plays an important role in supporting the creative process, because it can promote or hinder innovation-enhancing behavioural norms. Norms like risk taking, a tolerance of mistakes, and continuous support for change, are some of the attitudes and behaviors, those innovative enterprises try to promote in their culture. Organizational culture is increasingly seen as an element which, if effectively managed, could provide enterprises with managerial effectiveness. Encouraging and sustaining an organizational culture, which promotes the generation and implementation of new ideas among organizational members, is considered central to development of creative and innovative worksettings. Culture is considered as a form of social control that is characterized as a shared phenomenon, which exists in both visible artefacts and mission statements as well as in less visible and deeper levels. Strong cultures are not necessary conductive in generating and implementing new ideas in enterprises ( Grieves J., 2010). What is required is 49

7 culture, which helps to foster innovation-enhancing norms and at the same time promotes the social cohesion, necessary for turning ideas into innovations. Bibliography 1. Andriopoulos C., Dawson P., 2010, Managing Change and Innovation, SAGE Publications Ltd, London; 2. Beerel A., 2009, Leadership and Change Management, : SAGE Publications Ltd., London; 3. Berchicci L., 2009, Innovating for Sustainability, MPG Books Ltd., Bodmin, London; 4. Bessant J., Tidd J., 2009, Innovation and Entrepreneurship, John Wiley and Sons Ltd., Chichester, England; 5. Frappaolo C Knowledge Management. Chichester : Capstone Publishing Ltd., ISBN Grieves J., 2010, Organizational Change. Themes and Issues, Oxford University Press, London; 7. Lesáková L., 2009a., Determinants of Innovation Activities in Small and Medium Enterprises in Slovakia, in: Innovation - Factor Determining Competitiveness of Small and Medium Enterprises in the Global Business Environment, Faculty of Economics, Matej Bel University, Banska Bystrica; 8. Lesáková L. et al., 2009b, Innovative Management in the Knowledgebased Economy, Banska Bystrica, Faculty of Economics, Matej Bel University; 9. Monch A., 2006, Change Management, Carl Hanser Verlag, Munchen; 10. Walmsley B., 2009, Managing Change. Skills for success, Hodder Education Hachette Livre UK Company, London. 50