Professional Documents
Culture Documents
Building
An Innovative
Organizational
Culture
Introduction
Organizational Culture is the attitudes, experiences, beliefs and values of an organization [1].
It has been defined as "the specific collection of values and norms that are shared by people
and groups in an organization and that control the way they interact with each other and with
stakeholders outside the organization. Organizational values are beliefs and ideas about what
kinds of goals members of an organization should pursue and ideas about the appropriate
kinds or standards of behavior organizational members should use to achieve these goals.
appropriate kinds of behavior by employees in particular situations and control the behavior
of organizational members towards one another. In the changing paradigm of the new
economy, organizational culture that supports and encourages creativity and innovation is
Success is linked to constant innovation. In the new paradigm, most linear processes are
easily automated or outsourced [2]. Companies can achieve the real competitive advantage
through their ability to master nonlinear skills such as the unique design of goods and
Recently, Business Week and Boston Consulting conducted a study of The World’s Top 50
Most Innovative Companies [3]. Some of the most successful firms in the world, such as
Apple, Google, Toyota Motor, General Electric, top the list. 3M, the leading representation of
innovative companies for its invention of the Post-it Note by Art Fry, also came in seventh in
the list. Besides technology firms, leading firms in other industry such as Procter & Gamble
(household products), Walt Disney Co. (media), Starbucks (restaurants), and Wal-Mart (food
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and staples retailing), also achieved top ranks in the list. Exhibit 1 in Appendix A shows the
There is a strong correlation of innovation in the organizational culture and success in these
firms. This paper investigates on two cases of organizational culture of innovation, Google
and 3M, to understand how innovation and creativity are used as a strategic tool to achieve
success. While the emphasis is on building a creative organizational culture, this paper also
briefly discusses on the issues to be aware of when pursuing innovation in the company, such
Google Inc.
From a small internet search startup by two Stanford University graduate students (Sergey
Brin and Larry Page) to a company of 4,200 with revenue hitting almost $3.7 billion,
Google’s rocket to success has been built on its ability to harness wild ideas for business
innovations. Marissa Mayer’s, the Vice President of Search Product and User Experience,
role in bridging the PhDs and the MBAs of Google, helped the firm to remain competitive
against competitors in the search domain, such as Microsoft, Yahoo and Technocrati.
1. Free Thinking Time – Google gives all engineers one day a week to develop
their pet projects. Such free days can be accumulated if work gets in the way.
Pet projects do not have to be aligned with Google’s central mission. Google
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2. The Idea as List – An idea list is available company-wide for the inputting
3. Open Office Hours – Managers open their office for discussions with staffs
two to three times a week. The Google personalized homepage was produced
in this process.
are conducted eight times yearly. In these sessions, six concepts are pitched
and discussed for ten minutes each. The goal is to build an initial idea with at
Google. The company Keyhole that it bought in 2004 allowed Google to offer
Innovation Drivers
From these five ways to generate new ideas, Innoblog (public blog of Innosight, Clayton
Christiansen’s consulting firm) summarized them into three main innovation drivers [5]:
1. Rigor and Discipline – Besides creativity, the key to the success of Google is
in the rigor and discipline of their approach. This can be seen from the
brainstorming sessions conducted each year and the results expected from the
process.
2. Lead from Top – Supporting processes are instituted by the top management
office hours by managers and one day per week for pet projects are example of
this driver.
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3. Act like a Venture Capitalist – Google looks at great ideas outside the
company. This resulted in key acquisitions that allowed them to roll out
This paper proposes that there are at least two other key innovation drivers. The first is
Google’s ability to provide the environment for innovation to mature before they take flight.
Generating many ideas from many brilliant minds in the company does not necessary
translate to successful innovations at the marketplace. In Stevens and Burley pointed out that
on the average of only one idea is successfully commercialized from 3,000 raw ideas [6].
Google is able to provide such environments to let these innovations slowly take shape. One
example is the Google Labs where it showcases some prototypes which are not ready for the
market yet. This platform allows users to directly comment and influence on the development
of the innovations.
The second key innovation driver which this paper proposes is Google’s recruitment culture.
Google is able to bring in creative people to form its innovative organizational culture.
Stringent recruitment processes, coupled with some of the best benefits, attract talented and
3M Co.
By nurturing the talents of its employees, and fostering a climate of innovation, 3M is
possibly one of the most innovative firms of the present time. It is famous for household
brands such as Post-it Note, Scotchgard, Scotch tape, etc. In the company’s over 100 years
history, it has created over 55,000 products and served 30-plus core technologies and
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innovation [7]:
1. Recruiting and Retaining Talent – 3M recruits people who are creative and
have broad range of interests. It is thought that people with broad range of
interests are willing to learn and explore new ideas. 3M codified six traits of
These newly established divisions had to develop new products and find new
of 3M.
4. Rewarding Innovation – 3M rewards its staff for being innovative. The dual
career ladder paths allow technical staffs to be promoted to the role of vice-
“lobbyists” for new ideas and products. They are willing to take risks and
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Innovation Drivers
Collins and Porras summarized five innovative drivers from the 3M findings [8]:
1. “Give it a try, and quick!” – 3M has a process to try out many things and
keeping what really works. The key is to do something and keep on trying
something new.
mistakes. It treats failures as part of the innovative process and does not repeat
3. “Take small steps.” – Conduct experiments in small scale and develop in full
4. “Give people room they need.” – Staffs are given time, incentives, job
security and room to experiment. This is illustrated in the “15 Percent Rule”
where technical staffs spend up to 15% of their time on projects of their own
choosing or initiatives.
mechanisms for experiment for staffs to try new ideas and innovate.
and 3M, the next two sections discuss the issues to be aware of when pursuing innovation.
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Companies should be wary of such pitfalls when trying quick methods to transform their
organizational culture.
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Amara’s Law
Roy Amara, former president of the Institute for the Future states that [10] “We tend to
overestimate the effect of technology in the short run and underestimate the effect in long
run.”
For example, in the case of iPod, its effect on the production of music has not been fully
understood. There are huge longer-term implications. Similarly, RFID is more than about
tags. There are huge implications for how businesses operate and how society accepts the
potential of being tracked. The dot-com bubble burst in 2000 was another example of the
result of Amara’s Law. It was then predicted that Internet-based business model was the next
big thing. However, $5 trillion in market value was wiped out [11]. Seven years later, the
potential of Internet-based business model has been realized. Internet start-ups like
Amazon.com, Google, Alibaba.com have successfully acquired real business with many
customers.
The significance of Amara’s Law to organizational culture is that innovators in firms must
understand that innovations, which are not mature for the marketplace at the moment, may
have great impact next time and should not be put down quickly. On the other hand,
innovations that succeed today, may present other opportunities next time. Innovations such
as mobile phones have greater impact on people than predicted. It is better to exploit an
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Conclusion
Creativity and innovation are absolutely critical in today’s economy for firms to stay
competitive. This paper discussed the ways in which successful firms build innovation as part
of their organizational culture. Some of the similar key drivers for innovation in Google and
3M include: recruiting the innovative people, giving staffs room and space to innovate (1-
day-per-week-rule in Google and 15 Percent Rule in 3M), creating incentives for innovation,
and progressing in small and patient steps. Firms can learn from the approaches in the cases
of Google and 3M to build in their own DNA for Innovation. However, the ways to innovate
and generate ideas are constantly changing. The best approaches for these firms may not be
the best for other firms. It is necessary to recognize the importance of innovation in the
organizational culture, and adapt the success formulas from innovative companies to suit
individual firms.
This paper also briefly highlighted some of the pitfalls which firm should be aware of when
they embark in pursuing the innovative organizational culture. Firm must be willing to make
Law underlines the importance of assessing the long term impact of innovations. It is
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References
[3] The World’s 50 Most Innovative Companies, Business Week Magazine, 2007.
http://bwnt.businessweek.com/interactive_reports/most_innovative/index.asp?chan=innovatio
n_special+report+--+2007+most+innovative+companies_2007+most+innovative+companies
Retrieved on 6 Nov 2007.
[6] G. Stevens, J. Burley, 3000 Raw Ideas = 1 Commercial Success, Industrial Research
Institute, 1997.
[8] J. Collins, J. Porras, Built to Last, Random House Business Books, 7 Sep 2000.
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[9] D. Patnaik, Five Common Mistakes in Innovation, Business Week, 19 Oct 2007.
http://www.businessweek.com/print/innovate/content/oct2007/id20071019_786269.htm
[10] T. Espiner, Accenture’s King of Blue-Sky Thinking, CNet News.com, 30 Oct 2007.
http://www.news.com/Accentures-king-of-blue-sky-thinking/2100-1011_3-6216087.html
http://en.wikipedia.org/wiki/Dot-com_bubble
http://images.businessweek.com/ss/07/05/0503_innovative_co/index_01.htm?chan=innovatio
n_special+report+--
+2007+most+innovative+companies_2007+most+innovative+companies
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