Developing the Innovative Organisation

One of the more recent ‘buzz-words’ in management is the concept of the knowledge-based organisation. Governments have even begun to talk about promoting “knowledge-based economies”. A knowledge driven economy is one in which the generation and exploitation of knowledge plays the predominant part in the creation of wealth. Of critical importance to the successful development of a knowledge-based economy is the ability of firms to foster creativity and innovation. Knowledge is more than just information. It is the ideas and intellectual property that can be the wellspring of new business ventures and new product development.
Fostering creativity and innovation within an organisation is the principal challenge of managers in the 21stcentury. Innovation is a process of seeking market opportunities through identifying the value potential in existing operations and adapting them to generate new business or enhance existing business. Successful innovation is frequently simple and understandable. Innovation is not intrinsically difficult and does not have to involve high risk. A successful innovation is usually a response to a market need identified by the entrepreneurial organisation or individual. Incremental rather than revolutionary change is usually more important.
Most organisations with good track records in innovation make this a part of their culture. Innovation among organisations is frequently characterised by their willingness to tackle even the most demanding customers. Innovative companies also have the ability to identify access and use the external environment for expertise and knowledge, as well as valuing the skills and expertise of their employees. Within such firms interaction between skilled workers with technical skills enhances creative opportunities and the generation of new ideas. Innovation, therefore, seems to involve not only new ideas and their development, but also change and risk. It is a positive force for any enterprise seeking to develop competitive advantage.
Managers seeking to encourage innovation must realise that it is closely linked to human creativity. Fostering creativity within an organisation requires some or all of the following: 
  1. A tolerance of risk taking and failure;
  2. The ability to process information and generate new, original and meaningful ideas;
  3. A willingness to grant substantial autonomy to employees over decision making;
  4. The capacity for employees to set their own goals; and
  5. The creation of opportunities for employees to exchange ideas, skills and behaviours through a process of interactive learning.
Senior managers should consider how important knowledge or intellectual capital is to their competitiveness. If the answer finds it of greater importance than physical plant and equipment they should examine their corporate culture to see if it encourages or discourages innovation and knowledge creation. Ideally the company will possess a strong set of core values that emphasize innovation, diversity and flexibility. Forcing everyone to fit the “corporate mould” may prove counterproductive.
Push down the leadership in the company by giving greater responsibility to front line managers and employees. Encourage employees to exchange ideas, share knowledge and work together to solve problems in a collaborative way. Reward enterprise and discourage negativity, particularly the kind that suppresses new ideas.