Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Organizational Innovation and Learning Nicholas A. Ashford October 28, 2015 Topic Seven Objectives Explore the concept of, and motivating forces for, organization innovation/learning Discuss the role of networks in organizational learning Consider the idea of enterprises offering more sustainable products and services Discuss the difference between a cost-cutting versus performance/quality strategy Contemplate the employment consequences of future ICT innovation Workers Continuum Independent and contingent workforce; Little job security or tenure; needed skills and wages defined by the employer Collective/union Representation; shared decision-making; technological literacy; skills development; Wages supplemented by capital ownership Roles of Corporations Roles of Government Continuum Continuum Minimal State/ Utilitarianism Capitalist (laissez faire) approach to and markets Rawlsian Government Government acts as trustee for stakeholders; Interventionist approach to policy and markets Citizen & NGO Concerns Profit Maximization Capitalist (laissez faire) approach Corporate Social and Environmental Responsibility (CSER) Sustainable Industrialization Roles of Consumers Continuum ‘Value’ Consumers Purchasing based upon the price and perceived value of products and services Green Consumers Purchasing based upon the environmental and social impacts of products and services Shareholders’ Concerns Different Operating Postures that might be adopted by Government, Corporations, Workers, & Consumers in the Context of Citizen, NGO, & Shareholder Scrutiny An Expanded View of the Dynamics of Technological Change Invention Innovation Technological, Organizational, Institutional, Social Sustaining innovation Disrupting innovation Intrinsic innovation Architectural innovation Diffusion of technology Technology transfer Product innovation / product-services innovation Process innovation System changes Technological Innovation The first commercially successful application of a new technical idea (or an invention) Social Innovation Changes in the preferences of consumers, citizens, and workers for the types of products, services, environmental quality, leisure activities, and work they require, and changes in the processes by which the new preferences are selected Social innovations can alter both the supply and demand for products/services Organizational Innovation Organizational innovation and learning fall within the field of organizational theory Organization innovation focuses on the changes in and among various organizational aspects of a firm’s functions such as R&D/product development, marketing, environmental and governmental affairs, industrial relations, worker health and safety, and customer and community relations Institutional Innovation Changes in and among various legal norms as well as institutions/departments within a government with regard to their functions and goals and the working relationships and shared visions among them Brief history of inclusion of environmental sustainability in industry’s approach 1960s: Industry’s view – environmental problems can be addressed through management and technology changes 1970s: Industry caught off guard – new environmental/ social regulation established (period of externally-directed ‘technical compliance’) 1980s: Industry incorporates regulations into core business strategies and operations 1990s: Equalization of power between industry, government, and environmental groups – industry views environmental problems as something they can address (with the involvement of stakeholders) 2000s: Emergence of CSER and voluntary mechanisms Questions of Interest Why might firms adopt a defensive vs. a proactive approach to environmental challenges? Do the majority of firms ‘follow’ environmental regulations or exceed them through innovations? What does this imply for the role of government? Why might some firms seek to strengthen environmental standards or create new environmental regulations? Should we be concerned with such action? Why might government intervention be required even if firms are acting proactively? Motivating Forces for Organizational Change Increasingly stringent environmental legislation and enforcement Increasing costs associated with pollution control, waste disposal, and effluent disposal Increasing commercial pressure from the supply, consumption, and disposal of both intermediate and final products Increasing awareness on the part of investors of companies’ environmental performance in view of the cost implications associated with liability and the “polluter-pays” principle Source: Williams et al. (1993) Motivating Forces for Organizational Change, cont. Increasing training and personnel requirements, together with additional information requirements Increasing expectations on the part of the local community and the workforce of the environmental performance of firms and their impact on the environment The desire to become the ‘first-mover’ – to capture the market Demand from ‘green’ consumerism Source: Williams et al. (1993) Corporate Social and Environmental Responsibility (CSER) Moving beyond technical/regulatory compliance to develop business/management practices that integrate environmental and social concerns into the functions of the firm A proactive (rather than defensive) approach Many firms now have dedicated staff focusing on the firms environmental performance – particularly in the area of climate change Fundamental change or “greenwash”? Voluntary Mechanisms vs. Regulation? Evidence suggests that environmental performance gains are greater when firms respond to regulation (Bennear 2007) King and Lenox (2000) report that “U.S. chemical companies that have signed onto Responsible Care improve their environmental performance more slowly than non-participating firms” Hence, CSER is unlikely to be sufficient … unless there is a dramatic paradigm shift in the business mindset (globally) Organizational Learning “The ability to learn faster than your competitors may be the only sustainable competitive advantage” (Arie de Geus; former Shell executive) Limitations of the Neoclassical View Continuous process improvement is embedded in learning and experience within the firm and cannot be acquired on the market Firms do not have perfect information when they are selecting technologies A firm’s ability to switch to more productive/efficient technologies can be limited by previous capital investments The transfer and adoption of technology are not costless Source: Stoughton (1996). Organizational theory is critical to overcoming the limitations of the neoclassical view of the firm and of technological innovation as they relate to sustainable development Too much attention is given to market and institutional failure (ignoring organizational routines and constraints – compare NIMTOR and NIMTOO) Environmentally undesirable behavior on the part of firms is as much a matter of organizational failure as it is one of markets that do not internalize environmental costs The Challenge of ‘Lock-in’ Lock-in can happen as product lines develop and mature and firms become more heavily invested in existing technologies Locked-in firms can miss important emerging trends/technologies – i.e., their focus is on existing consumers and on exploiting/improving existing technology Locked-in firms can try to break free from a sustaining innovation trajectory by adopting an exploratory learning strategy Networks can be a valuable source of information and hold the potential to help firms overcome the challenge of “lock-in” The Role of Networks The Role of Networks Firms are embedded in networks Networks can help stimulate innovation and learning through the dissemination of knowledge and/or skills among network actors Interaction between different groups/individuals with different views/perspectives/expertise is important But … networks can also serve to inhibit learning and change (i.e., lock-in) and promote evolutionary rather than revolutionary change Networks and their functions Intra-organizational networks – planning, production, new product development within the firm/ organization Providing internal sources of technical ideas and information Networks and their functions, cont. Trans-organizational networks – connecting units in the supply chain (firms, suppliers, contractors, customers, consumers) Providing external sources of technical ideas and information Creating performance requirements and information about market demand and opportunities Networks and their functions, cont. Supra-organizational networks – firms, competitors, NGOs, regulators, and outsiders Providing external sources of technical ideas and information – these may differ than those from the supply chain actors Creating performance requirements and information about market demand and opportunities – these too may differ from the existing supply chain inputs Networks and their functions, cont. Environmental-worker-consumer-community coalitions Shared decision-making can involve the firms and their customers, workers, and community-based groups Is transformation of the industrial state likely to come from a bottom-up social revolution? See the later discussion of the New Economics and Degrowth advocates) Which type of network is likely to promote revolutionary change? Intra-organizational networks (within the firm/organization)? Trans-organizational networks (within supply chain)? Supra-organizational networks (firms, competitors, NGOs, regulators, outsiders)? Environmental-worker-consumer-community coalitions? Shared decision-making can involve the firms and their customers, workers, and community-based groups and facilitate consensus However, networks can also foster bounded rationality and create path-dependency and lock-in. Is a industrial transformation likely to be evolutionary or revolutionary? In the products offered? In the sources of energy? Is energy a product? In energy use? Here energy enables the creation/manufacture of products and the delivery of services. Are the incumbent firms likely to the innovators? Implications for the Firm (after Christensen) The firm’s organizational structure and the way its groups learn to work together can then affect the way the firm can -- and cannot -- design new products. Managerial decisions that make sense for companies outside an established customer base make little sense for those within it, and vice versa. Regulation can ‘make a market’ by providing directions for technological change and product attributes. Regulatory requirements that are viewed as disruptive by the firm often require disrupting technological changes -- and that is why managers of firms that pursue sustaining innovation resist regulation. Established firms will try to influence regulation that can be satisfied by sustaining innovations -- if not by diffusion of their existing technologies => capture and lock-in van de Poel (2000): Role of Outsiders An outsider: “actors not involved in technical development or decision-making about technology and not sharing the rules that guide the design and further development of a technology” Categories of outsiders: [1] societal pressure groups, [2] professional scientists and engineers, and [3] outsider firms Outsiders can trigger radical (i.e., disrupting) technical change if they get involved in technical development in other ways than adopting the rules of the existing regime (a failing enterprise often brings in an outsider to “save the operation”) Innovation and Customer Satisfaction Innovations that provide customer satisfaction in essentially the same way GM foods, Nike’s “green” rubber – no adoption challenges are presented to the existing customer base Innovations that are the same in basic concept but differ somewhat in the quality/nature of satisfaction Ecologically-friendly dishwashing soap – some adoption challenges may be experienced by the existing customer base Innovations that deliver customer satisfaction in a significantly/wholly different way – or appeal to a different attribute of the technology (such as leasing carpets; or hybrids) Requires a fresh prospective on how products/services can be delivered with minimal environmental/social impacts – adoption challenges might be significant (look for new emerging markets or a customer base) Determinants of Evolutionary Change Willingness Towards changes in production (flexibility) Influenced by an understanding of the problem Influenced by knowledge of options or solutions (diffusion) Influenced by the ability to evaluate alternatives Opportunity/Motivation Gaps in technological/scientific capability (existing markets) possibility of economic cost savings in existing markets or new/expanded market potential (industrial competitiveness) Regulatory requirements (making new markets) Consumer/worker/societal demand (making new markets) Capacity influenced by an understanding of the problem Influenced by knowledge of options (diffusion) influenced by the ability to evaluate alternatives Resident/available skills and capabilities (innovation) Role of outsiders (deviants?) Responses of Firms to Environmental Challenges Within Existing Firms/Sectors (Evolutionary Change) I – Changes in internal environmental practices II – Adopting and adapting better off-the-shelf existing technologies (diffusion/incremental innovation) III – Development of new technologies and new applications of existing technologies by existing firms (mostly involving sustaining innovation) Outside the Incumbent Firm/Sector (Revolutionary Change) IV – Replacement of the problematic technology (product or process) by a new entrant (who most likely develops a disrupting innovation) V – System changes necessitating a reorientation and/or reorganization of industry Product-Services What is a product-service? Why might product-services hold the key to achieving greater industrial sustainability? How might the transition to product-services be stimulated? Who would oppose the substitution of products by product services? Is a shared economy in which more products are used by previous non-users because they are shared -- likely to be sufficiently offset by a reduction in individuallyowned products? Determinants of Revolutionary Change Willingness Crises/Tipping points/Visionary leadership Towards changes in production (flexibility) Influenced by an understanding of the problem Influenced by knowledge of options or solutions (diffusion) Influenced by the ability to evaluate alternatives Opportunity/Motivation Crises/Tipping points/Visionary leadership Gaps in technological/scientific capability (existing markets) possibility of economic cost savings in existing markets or new/expanded market potential (industrial competitiveness) Regulatory requirements (making new markets) Changing the rules Consumer/worker/societal demand (making new markets) Capacity influenced by an understanding of the problem Influenced by knowledge of options (diffusion) influenced by the ability to evaluate alternatives Resident/available skills and capabilities (innovation) ) Building New Capacity Role of outsiders (deviants?) New actors, innovators, institutions, political agendas “Sustainable” Employment Premise: Citizens (as employees) have a right to benefit from industrial transformations Challenge: How to achieve a fair division of the fruits of the industrial or industrializing state, and a safe and healthful environment and workplace? Solution: Requires environmental sustainability, but also sufficient job opportunities, job security, and purchasing power, as well as rewarding, meaningful, and safe employment – i.e., sustainable employment Need to elevate employment concerns to the status of environmental and economic development concerns Innovation and Employment Observations (after Edquist) It is generally accepted that product innovations create jobs It is generally accepted that process innovations destroy jobs Employment opportunities are more likely if the new products are cheaper and [1] consequently command a sufficient increase in demand and units sold, or [2] the increase in disposable income enjoyed by consumer is spent on other products Innovation and Employment, cont. But, job creation relating to new products might be counteracted by job destruction relating to the older products There is also a tendency for new products to be capital intensive – i.e., less jobs are created The key to job creation is that growth in production (i.e., demand) needs to outstrip productivity gains (i.e., production efficiencies achieved via process innovations) Outcome: We need to consume more (i.e., grow the economy) to maintain employment! Should we pursue growth in products vs. product-services? Strategies to Enhance Productiveness and Competitiveness (after Charles et al.) Cost reduction strategies Enhanced by increased scale of production and/or automation (and excess capacity) Rigid, monopolistic production (promotes sustaining innovation) Shedding and deskilling of labor Where domestic markets are saturated/have excess capacity, trade becomes the major focus Innovation-based performance Enhanced by technological innovation and changing product markets Fluid, competitive production (lean production/HPWS?) Optimizing the use of human resources (labor) Upskilling of labor Important in both domestic and international commerce Improving labor Productivity Use/develop better hardware, software, and manufacturing systems (substitution of labor by capital – including energy) Increase capital productiveness Workers’ share of profits are decreased / de-skilling of labor Increase worker skills Increase labor productiveness Rewards to workers are increased since labor is more highly valued Better matching of labor with natural/physical capital, and with information and communication systems (complementarity) Increase joint labor and capital productiveness Skilled labor is intelligently designed into production and services Human-centered knowledge-based work Rewards are increased for both owners and workers Conclusion Employment concerns are likely to increase in coming decades Like the environment, employment needs to be considered before embarking along new (sustainable) development pathways An innovation-based strategy for (sustainable) development – that seeks to promote radical (i.e., disruptive) innovation – has the potential to generate sustained economic, environmental, and employment (including increased wages) gains, but employment changes have to be deliberate to avoid the shedding of labor The 2nd Machine Age is not optimistic about ICT creating net increases in high-wage, skilled employment Role of Government Government needs to create winning forces and scenarios, and provide an enabling and facilitating role by creating visions for sustainable transformations (backcasting) There is a need for an ‘Industrial Policy for Sustainability” Direct support of R&D Tax incentives for the investment in sustainable technologies The creation and dissemination of knowledge The creation of markets through government purchasing The removal of perverse incentives of regulations The training of owners, workers, and entrepreneurs, and educating consumers The direct creation of (sustainable) jobs Industrial-Networks Theory Theory focuses on the network character of the firm and its environment Innovation and learning are products of interactions among network actors Networks provide access to important resources outside of firm Network stability derived from trust, reliability, and actor reputation and the fact that knowledge and/or skills cannot easily be monopolized by one organization Networks offer economic opportunities that are not predicted by the neoclassical model Sociotechnical Networks (STNs) Technological innovation and learning considered from a social point of view Emphasis is given to understanding the characteristics of actor position and relations within a social network Discussion of the value of ‘strong’ vs. ‘weak’ ties between actors Networks that span groups with different ways of thinking can promote good ideas Network exit strategy is important – need to think about future affiliations Ecosystem Disruption Climate Change Toxic pollution Resources Increased environmental footprint from the need to increase employment & industrial throughput Environment Development & environment Trade & environment Environmental/energy improvements creating employment Investment & environment Technological change & globalization Economy Work Skills Wages Purchasing Power Job Security Health and Safety Job Satisfaction Number of Jobs Changing international division of labor Changes in the nature of work Improvements in competitiveness, productiveness, and the use of physical, natural, & human capital Economic changes (arising from labor replacement & capital relocation) Financing growth and development Modes of Learning Constraints (Voluntarism to Determinism) Few constraints Mode of Thought and Action Methodical / Standards Emergent and Subtle Values Analytic: Learning characterized by systematic and objective analysis of available data. Few restrictions are placed on actors. Synthetic: Learning characterized by an instinctive form of pattern formulation that is internal to a manager. Few restrictions are placed on actors. Action constrained Experimental: Learning characterized by bounded, problem-driven assessments, incremental experimentation, and satisficing behavior. Experiments can limit action. Interactive: Learning characterized by actors identifying patterns from the contrasting ideas and conflicting objectives facing them as they interact with allies and rivals. Political interactions can limit action. Action and thought constrained Structural: Learning characterized by routines that standardize information processing and behavior. Routines constrain both thought and action. Institutional: Learning characterized by institutional forces such as laws, social norms, or personal values that shape actor thinking. Institutional learning constrains both thought and action. Source: Adapted from Miller (1996, pp. 488-489). When might management adopt a costcutting vs. quality strategy? Cost Cutting Strategy Quality Strategy Low capital-labor ratios (clothing) High capital-labor ratios (chemicals/pharmaceuticals) Management is diversified Management continues established practices Management relies on financial control Management practices strategic planning Firm stands alone or is not part of a successful cluster Firm part of successful cluster of internationally competitive industries Labor bargaining is decentralized Highly centralized trade union movement Limited state regulation High measure of state regulation, especially in the training of workers Less environmental protection Environment is protected Source: Sisson (1995). Where Are We on a Political and Value Map? Government Posture Liberalism Values Solution space Rawlsian Outcome Utilitarianism Communitarianism Rawlsianism U.S. Political Outcome Bound the problem by considering the ends of the decision-making continuum Conservatism