"Creativity, it has been said, consists largely of re-arranging what we know in order to find out what we do not know." George Keller
Recently I received an email asking: Can anybody tell me the "Role of Human Resource Development in creating a culture for Innovation and Protecting Intellectual Property?"
This question is a very very complex one. There is no simple answer - to effectively answer this one needs to understand the concept of creativity and innovation. Therefore I decided to write down the answer in a way as simple as possible. This set off a train of thoughts that eventually resulted in today’s blog. This article is not a complete answer for the question - but it gives a guideline to find the final solution.
What is creativity?
To begin with lets examine the concept of creativity. Creativity can be best defined as "Creativity is a process involving the generation of new ideas or concepts, or new associations between existing ideas or concepts. From a scientific point of view, the products of creative thought are usually considered to have both originality and appropriateness."
An alternative, more everyday conception of creativity is that it is simply the act of making something new with is useful and appropriate.
Although intuitively it is a simple phenomenon, creativity is in fact quite complex. Unlike many phenomena in science, there is no single, authoritative perspective or definition of creativity. Unlike many phenomena in psychology, there is no standardized measurement technique.
Organizational Perspective of Creativity
Today organizations thrive on creativity. Entire high tech industry, pharmaceuticals, construction industry, architecture firms, publishing houses, art dealers, movie industry, music industry all are dependent on creativity for growth and survival.
From an organization perspective - few organizations are more creative than others. 3M, Google, Yahoo and Apple have become icons of corporate creativity. But creativity is not limited to these companies alone, IBM, Intel, AMD, Microsoft, Oracle, and a host of others file hundreds of patents every year. This implies that creativity can be imbibed into the organization.
In the context of creativity in organizations, it is useful to explicitly distinguish between creativity and innovation. In such cases, the term innovation is often used to refer to the entire process by which an organization generates creative new ideas and converts them into novel, useful and viable commercial products, services, and business practices, while the term creativity is reserved to apply specifically to the generation of novel ideas by individuals, as a necessary step within the innovation process.
Innovation begins with creative ideas, creativity by individuals and teams is a starting point for innovation; creativity is a necessary but not sufficient condition for innovation.
What is Innovation?
There is no single definition for innovation. Definitions for innovation include:
- The process of making improvements by introducing something new
- The act of introducing something new
- A new idea, method or device.
- The successful exploitation of new ideas
- Change that creates a new dimension of performance
Often invention is confused with innovation. Invention is creation of new tools. Where as innovation includes invention and a lot more. Innovation includes invention of something new, developing a new use for existing use, developing a new process or a method to solve existing problem and economic value creation from creative ideas.
From a business point of view, the last point is most important: Creating economic value by new means is innovation.
Innovation in organizations
Innovation typically involves creativity, but it should not be confused with creativity. Innovation involves acting on the creative ideas to make some specific and tangible difference in the domain in which the innovation occurs.
For example, Amabile et al propose:
"All innovation begins with creative ideas . . . We define innovation as the successful implementation of creative ideas within an organization. In this view, creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second".
For innovation to occur, something more than the generation of a creative idea or insight is required: the insight must be put into action to make a genuine difference, resulting in new or altered business processes within the organization, or changes in the products and services provided by that organization.
Types of Innovation
As mentioned earlier, innovation is much more than invention. This implies that there are several types of innovation - companies need not invent new things & yet be innovative. For example, DELL innovated the direct sales for computers. Dell did not invent the computer, Dell did not invent direct selling. Dell innovated a new business model - selling PCs directly to customers.
Types of innovation
- Product innovation, involves the introduction of a new good or service that is new or substantially improved. This might include improvements in functional characteristics, technical abilities, ease of use, or any other dimension.
- Process innovation involves the implementation of a new or significantly improved production or delivery method.
- Service innovation, is similar to product innovation except that the innovation relates to services rather than to products
- Business Model innovation involves changing the way business is done in terms of capturing value e.g.
- Marketing innovation is the development of new marketing methods with improvement in product design or packaging, product promotion or pricing. E.g.. Sears introduced catalog sales. McDonalds innovated joint marketing promotion with Disney.
- Organizational innovation involves the creation or alteration of business structures, practices, and models, and may therefore include process, marketing and business model innovation.
- Supply chain innovation where innovations occur in the sourcing of input products from suppliers and the delivery of output products to customers
For example, financial innovation of adjustable mortgage rates created a whole new way of financing a house. Another example of financial innovation is co-promotion credit cards where customers can earn points/airline miles by using a credit card.
Disruptive Innovation and Incremental Innovation
In the world of business, we often hear the term "Disruptive Innovation". Disruptive innovation are the ones which challenge and destroy the existing business systems. For example MP3 players destroyed the market for music CDs and Walkman. In general, disruptive innovation tends to bring in radical/revolutionary changes in the business environment.
Disruptive innovation are relatively rare - when compared to Incremental innovation. Incremental innovation refers to slight improvements to existing products/services. For example Video iPod is an incremental innovation over the original iPod.
Sources of Innovation
Having defined creativity & Innovation, we can now discuss about sources of developing an innovative organization. For most part of the human civilization - there has been two sources of innovation. One is manufacturer innovation - where a business creates a new product to sell to customers.
The other main source is customer induced innovation. In this case customer develops a new use for the existing product or demands a new product which meets his needs. A new source of innovation is now becoming popular - Customer as Co-Innovator .
Innovation by businesses is achieved in many ways, with much attention now given to formal research and development for "breakthrough innovations." But innovations may be developed by less formal on-the-job modifications of practice, through exchange and combination of professional experience and by many other routes. The more radical and revolutionary innovations tend to emerge from R&D, while more incremental innovations may emerge from practice - but there are many exceptions to each of these trends.
Customer innovation though widely popular - but rarely credited to a individual customer. For example iPod or personal MP3 player was actually a customer induced innovation. While the MP3 format was a manufacturer innovation. MP3 format was developed by Berlin University research labs.
Whether innovation is mainly manufacturer driven or customer driven. But creating economic value from that innovation is totally dependent on the internal working of the organization.
Creating an Innovative Organization
Creating an Innovative organization starts with having a innovative culture - the values, rules, customs and incentives that govern the way we work and the way organization functions.
In the world of innovation, culture comes down to shared attitudes, values and beliefs. It determines how well we encourage creativity, risk-taking, entrepreneurship, and networks to share knowledge and ideas. In short cultures which encourage creativity tend to be more innovative.
Innovation also depends on:
- Human capital: i.e., People and their skills. Organization must hire creative people - with appropriate skills.
- Organizational and physical infrastructure: R&D labs, leadership and the environment.
- Financial infrastructure: Willingness to invest money & resources for innovation.
- Legal infrastructure and civil justice system to protect the intellectual property. (I will discuss more about Intellectual property protection later in the next part.)
- Social capital: Relationships between people and between organizations. Innovation rarely takes place in vacuum. People should be able to network with others - both within and outside the organization and between organizations to exchange ideas - that eventually foster innovation.
Human Capital
If one were to look at the centers of Innovation in the last century, one will see that most innovation came from a few select places in Europe, Japan, Asia and US. These geographic centers such as Silicon Valley, Boston, Cambridge, Berlin, Moscow, Bangalore etc. have highly educated & talented people. It is this talent that is driving companies, capital and more people to these locations - and that is inturn creating the right ambiance for innovation.
Innovation within an organization will never occur without talented & creative people. Organizations have understood this concept and have invested in developing educational facilities, training facilities within their organization and also in the local neighborhood. For example companies( e.g.. HP, SUN) in Silicon Valley fund local universities (Stanford, UC Berkeley, etc.) - these universities in turn train new individuals (Larry Page, Jerry Young etc.) and they in turn create new companies (Yahoo, Google, et) and the cycle continues.
Innovative organizations are committed towards developing Human Capital.
Organizational and Physical Infrastructure
To be innovative organizations need the right infrastructure - in terms of R&D facilities, labs, computers, software etc. In addition to physical infrastructure, it also needs organizational support in form of leadership & guidance. Having a strong support from the top leadership within an organization helps to encourage innovation. Leadership support ensures that the right infrastructure for innovation is in place and people have access to it. Leaders also inspire employees to try something new & be innovative.
For example look at Google, employees are encouraged to spend 20% of their time on pursuing their own ideas. This has led to a whole lot of innovative ideas at Google: Google maps, Google earth, Google mail, Picasa, etc. The leadership attitude at Google can be seen from the statement from Larry Page: "We're willing to tolerate that ambiguity and chaos because that's where the room is for innovation."
Financial infrastructure
Access to financial capital is key to innovation. Most innovators need money to test & try out their innovation. Without this investment, new ideas will never be implemented - and will remain only on paper. If one looks into Silicon Valley, it becomes clear that Silicon Valley thrives because of venture capitalists, bankers, Corporate R&D funding, and Government R&D funding. Bangalore became a technology center primarily because of all the investments done by the government in developing the various R&D centers in the city. In general, it can be said that to encourage innovation one needs to:
- Create an environment that encourages more financial institutions and other private sector sources to lend money to business - both large, small and new startups.
- Encourage new private sources of capital and more financial institutions, to lend to and invest in new businesses.
- Encourage venture capitalists and angle investors to setup operations.
- Reduce regulatory barriers and regulatory costs for new business.
- Encourage innovation via tax incentives.
Legal infrastructure and civil justice system
Innovators need legal protection to protect their new ideas from piracy. In the initial period after the innovation, individuals or organizations must have protection from piracy - else larger organizations with huge resources can hijack the innovation for profit. Yet the value of the innovation must become a shared good. This is why the patent laws are created and the patent law protection is not permanent - and has a definite time span. Having access to patent offices, ability to quickly file for patents and a strong legal system to protect the patents, trademarks and copyrights is essential for encouraging innovation.
Social Capital
Innovation rarely takes place in isolation. Innovation needs a right social environment in terms on culture, community encouragement and customer needs.
Today most of the innovative companies tend to be clustered in few geographic locations. Such clustering allows employees to interact with others, share ideas, develop ideas, validate ideas and improve ideas during the process of innovation. Clustering of companies also provides a sense of security to employees in terms of employment - as they can find an alternate job if their current idea fails. Thus innovative people are attracted towards these clusters.
Clustering of companies in one geographic location also allows for networking of organizations. Startups can network with Venture capitalists, with legal firms, with banks, with business consulting firms etc. It this kind of networking which allows startups to flourish and grow in the initial stages.
Clustering can improve competitiveness and innovation. Companies and communities can benefit from increased competition. Thanks to increasingly sophisticated technology and telecommunications, the competition is becoming more fierce - thus encouraging greater amount of innovation. Competition creates a demanding environment. Knowledgeable customers armed with a choice of suppliers tend to force companies to innovate.
The best network for innovation can be seen in the Silicon Valley of California - where there is a well established network of universities, companies, legal firms, financial companies, venture capitalists, and government R&D centers. By contrast, companies that enjoy monopolies - have failed to innovate.
Innovation & Culture
Among all the factors, Culture probably plays the most important role in innovation. By culture, I mean the social culture in the general society. How does the society treat new ideas? Does it encourage it? Does it discourage it? Does it scorn on people who do things differently? Does it encourage people who are different?
Innovators come from societies which is open for new ideas, new ways of doing things. Culture reinforces the behavior and strategies required to succeed in any given environment. But environment dictates culture, too. If we live in a business environment that favors innovation, then such behavior will become prevalent. There is an old saying, which goes: "Necessity is the mother of invention." The more demanding the environment in certain respects, the more likely the organization or individual is to respond innovatively.
Closing Thoughts
Innovation requires creative thought, technical & scientific ability, financial skills, market demands and customer acceptance. This can be created only through innovative communities - which is network of organizations and individuals.
Now coming back to the original question: Can anybody tell me the "Role of Human Resource Development in creating a culture for Innovation and Protecting Intellectual Property?"
Innovation is always a human endeavor. Without the right human resources - people and people skills, no innovation is possible.
(I still haven’t answered the question on protecting intellectual property - I will do that in the next part of this article.)
Also See
- Customer as Co-Innovator
- Global R&D Network
- Virtual Scale - Alliances for Leverage
- Cutting Edge R&D in India
- Understanding Financial Value Creation
- Innovation A Core Business Concept Part-1
- Innovation A Core Business Concept Part-2
- Collaborate to build Competitive Advantage
- Globalization of R&D
- Organization Development in High Tech Startups
- The Value of Talent
- Giving Your Top Performers a Reason to Stay
- Improved Cross-cultural Communication Increases Productivity
- Managing Diversity for High Performance
- Promoting Organizational Change Through Communication
- Hiring in high-tech firm: Build Vs Buying Talent
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