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Culture and climate for Virtually all companies talk about innovation,
innovation and the importance of doing innovation,
many actually try to do it, and only a few
actually succeed in doing it. The reality is that
innovation, for the most part, frightens organi-
sations because it is inevitably linked to risk.
Many companies pay lip service to the power
Pervaiz K. Ahmed
and benefits of innovation. To a large extent
most remain averse to the aggressive invest-
ment and commitment that innovation
demands. Instead they dabble in innovation
and creativity. Even though innovation is
debated in senior level meetings as being the
lifeblood of the company, and occasional
resources and R&D funds are thrown at it,
The author
often the commitment usually ends there.
Pervaiz K. Ahmed is Unilever Lecturer in Innovation However, becoming innovative demands more
Management at the University of Bradford, Bradford, UK than debate and resources; it requires an
organisational culture that constantly guides
Abstract organisational members to strive for innovation
Notes that many companies pay lip service to the idea and a climate that is conducive to creativity.
of innovation and stresses that becoming innovative Innovation is holistic in nature. It covers
requires an organisational culture which nurtures innova- the entire range of activities necessary to
tion and is conducive to creativity. Considers the nature of provide value to customers and a satisfactory
organisational climate and of organisational culture, return to the business. As Buckler (1997)
focusing on factors which make for an effective organisa- suggests, innovation is an environment, a
tional culture. Looks at the interplay between various culture almost spiritual force that exists in
organisational factors and innovation and suggests a company and drives value creation. Inno-
elements which promote innovation. Concludes that the vation maybe viewed as three fairly distinct
most innovative companies of the future will be those phases which are often viewed to be sequen-
which have created appropriate cultures and climates. tial but in reality are iterative and often run
concurrently. The first is the idea generation
phase which is typically the fuzzy front end. A
lot of the ideas from this stage typically do not
proceed onto the second stage, because often
numerous problems show up, ranging from
feasibility to compatibility with strategic
direction. At the second stage most frequently
encountered is the structured methodology
phase which typically consists of some type of
stage-gate system. Most large companies
deploy some variation of a structured
methodology. The stage-gate system consists
of hoops which the new idea must pass in
order to demonstrate its feasibility and com-
patibility with the organisations objectives.
The third stage is commercialisation. This
phase consists of actually making the idea an
operational feasibility. In others words, the
product is produced so as to allow extraction
of value from all that has been created in the
earlier phases.
European Journal of Innovation Management
Volume 1 Number 1 1998 pp. 3043 Although innovation cannot be touched,
MCB University Press ISSN 1460-1060 heard, tasted or seen it can be felt. It is
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

probably best described as a pervasive attitude is indicative of the way the business runs itself
that allows business to see beyond the present on a daily and routine basis. In one sense it is
and create the future. In short, innovation is the encapsulation of the organisations true
the engine of change and in todays fiercely priorities.
competitive environment resisting change is Humans are active observers of the envi-
dangerous. Companies cannot protect them- ronment in which they live. They shape the
selves from change regardless of their excel- environment and are shaped by the environ-
lence or the vastness of their current resource ment in which they exist and from which they
basin. Change, while it brings uncertainty and infer organisational priorities. From this
risk, also creates opportunity. The key driver understanding they align themselves to
of the organisations ability to change is inno- achieve their own particular ends. At times
vation. However, simply deciding that the these personal ends may coincide with those
organisation has to be innovative is not suffi- of the organisation or they may conflict.
cient. That decision must be backed by Understanding and perceptions of the envi-
actions that create an environment in which ronment act as guiding mechanisms. The
people are so comfortable with innovation practices and procedures that come to define
that they create it. these perceptions are labelled climate.
Culture is a primary determinant of inno- Scheider et al. (1996) define four dimensions
vation. Possession of positive cultural charac- of climate:
teristics provides the organisation with neces- (1) Nature of interpersonal relationships
sary ingredients to innovate. Culture has is there trust or mistrust?;
multiple elements which can serve to enhance
are relationships reciprocal and based
or inhibit the tendency to innovate. Moreover
on collaboration, or are they competi-
the culture of innovation needs to be matched
against the appropriate organisational con-
does the organisation socialise new-
text. To examine culture in isolation is a
comers and support them to perform,
mistake, and to simply identify one type of
or does it allow them to achieve and
culture and propose it as the panacea to an
assimilate simply by independent
organisations lack of innovation is to com-
pound that mistake.
do the individuals feel valued by the
Innovation cultures and innovation (2) Nature of hierarchy
climates are decisions made centrally or
through consensus and participation?;
Visiting companies like 3M, Hewlett-
Packard, Sony, Honda, The Body Shop, one is there a spirit of teamwork or is work
is left with a feeling that is not often encoun- more or less individualistic?;
tered in ordinary companies. This feeling are there any special privileges accord-
often defies definition yet despite its intangi- ed to certain individuals, such as man-
bility contains organisational concreteness as agement staff?
real as the machinery on the shop-floor. This (3) Nature of work
feeling usually is found rooted in the prevail- is work challenging or boring?;
ing psyche of each organisation. A company are jobs tightly defined and produce
like 3M feels dynamic while some of its coun- routines or do they provide flexibility?;
terparts feel rather staid and unexciting. The are sufficient resources provided to
feel of the organisation reflects both its cli- undertake the tasks for which individu-
mate and culture. The term climate histori- als are given responsibility?
cally stems/originates from organisational (4) Focus of support and rewards
theorists such as Kurt Lewin (leadership what aspects of performance are
styles create social climates), Douglas appraised and rewarded?;
Mcgregor (theory X and Y) , who used the what projects and actions/behaviours
term to refer to social climate, and organisa- get supported?;
tional climate respectively. The climate of the is getting the work done (quantity) or
organisation is inferred by its members getting the work right (quality) reward-
through the organisations practices, ed?;
procedures and rewards systems deployed and on what basis are people hired?
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

The parameters listed above help to define Furthermore, culture can be thought of as
climate. It is primarily from these sources that having two components: explicit or implicit.
employees draw inferences about the organi- The distinction between explicit and implicit
sational environment in which they reside and components of culture is important in that it
understand the priorities accorded to certain allows a better understanding of how to
goals that the organisation espouses. analyse and manage it. Explicit culture repre-
Closely allied to the concept of climate is sents the typical patterns of behaviour by the
culture. Organisational culture refers to people and the distinctive artefacts that they
deeply held beliefs and values. Culture is produce and live within. Implicit component
therefore, in a sense, a reflection of climate, of culture refers to a values, beliefs, norms
but operates at a deeper level. Whereas cli- and premises which underline and determine,
mate is observable in the practices and poli- the observed patterns of behaviour (i.e. those
cies of the organisation, the beliefs and values expressed within explicit culture). The dis-
of culture are not visible at that level but exist tinction is necessary because it serves to
as cognitive schema which govern behaviour highlight that it is easier to manipulate explicit
and actions to given environmental stimuli. aspects when trying to fashion organisational
To illustrate the inter-linkage, 3M has the change. For example, in trying to make the
practice of setting aside a certain amount of company customer oriented it may be possi-
time for employees to do creative work on ble to elicit certain actions and behaviours
their own initiatives. To support this, specific from employees through relatively simple
seed funding is provided, and the individuals training in customer satisfaction techniques
are encouraged to share and involve and but not necessarily effect any change in
become involved in each others projects. implicit culture. A change in implicit culture
These practices and support (climate) make would necessitate altering the value set of the
individuals believe that senior management individual members to the extent that it
values innovation (culture). Culture thus became an unconscious norm of action,
appears to stem from the interpretations that rather than guided by procedural or other
employees give to their experience of organi- organisational control routines. The degree
sational reality (why things are the way they and extent to which this happens is dependent
are and the how and why of organisational on the strength of the culture.
priorities.) The strength of culture depends primarily
If the notion of innovation culture is to be on two things:
useful, it is important to be clear about what (1) Pervasiveness of the norms beliefs and
we mean by the term. Failure to specify it behaviours in the explicit culture (the
clearly leads to confusion and misunderstand- proportion of members holding strongly
ing. The question, what is innovation culture, to specific beliefs and standards of behav-
is pertinent yet complex. The reason for this is iours).
partly to do with the way the concept of cul- (2) Match between the implicit and explicit
ture has evolved and partly to do with the aspects of culture.
inherent complexity within the concept itself.
Another way of looking at culture is in terms
It is perhaps important to remember that the
of cultural norms. Creating culture through
concept of corporate culture has developed
use of words is however seldom enough.
from anthropological attempts to understand
Essentially norms vary along two dimensions
whole societies. The term, over time, came to
(O Reilly, 1989):
be used to other social groupings, ranging
(1) The intensity: amount of approval/disap-
from whole nations, corporations, depart-
proval attached to an expectation.
ments and even teams within businesses.
(2) Crystallisation: prevalence with which the
There are a multitude of definitions of
norm is shared.
culture but most suggest culture is the pattern
of arrangement or behaviour adopted by a For instance when analysing an organisations
group (society, corporation, or team) as the culture it may be that certain values are held
accepted way of solving problems. As such, widely but with no intensity, e.g. everyone
culture includes all the institutionalised ways understands what top management wants,
and the implicit beliefs, norms, values and but there is no strong approval/disapproval.
premises which underline and govern By way of contrast, it may be that a given
behaviour. norm such as innovation, is positively valued
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

in one group (marketing and R&D) and or authority cannot. Moreover, given the
negatively valued by another (say manufactur- nature of culture and climate, it is clear that
ing). There is intensity but no crystallisation. senior managers play a critical role in shaping
It is only when there exist both intensity and culture, since they are able to give priority to
consensus that strong cultures exist. This is innovation, as well as make efforts, in terms of
why it is difficult to develop or change culture. rewards for instance, to guard against compla-
Strong cultures score highly on each of the cency. Employees take the priorities set by
above attributes. Moreover, really strong what management values, and use these to
cultures work at the implicit level and exert a guide their actions. The challenge for man-
greater degree of control over peoples behav- agement then is to make sure that the employ-
iour and beliefs. Strong cultures can be bene- ees make the right type of attributions, since
ficial as well as harmful, depending on the any mismatches or miscommunication quite
circumstances in which the organisation finds easily leads to confusion and chaos.
itself. The value of strong cultures is that by
virtue of deeply-held assumptions and beliefs
Organisational culture and effectiveness
the organisation is able to facilitate behaviours
in accordance to organisational principles. A Having examined the issue of defining cul-
company that can create strong culture has ture, it is necessary to check the attributes that
employees who believe in its products, its make for its effectiveness. The topic of culture
customers, and its processes. and effectiveness is of central importance, yet
However, organisations need also to be the area is beset by a formidable set of
wary of a strong culture. As well as being a research problems. According to Denison and
strength, it can in circumstances be a hin- Mishra (1995), any theory of cultural effec-
drance. To effectively use culture over the tiveness must encompass a broad range of
long term, organisations need to also possess phenomena extending from core assumptions
certain values and assumptions about accept- to visible artefacts, and from social structures
ing change. These values must be driven by to individual meaning. In addition, the theory
the strategic direction in which the company must also address culture as symbolic repre-
is moving. Without these a strong culture can sentations of past attempts at adaptation and
be a barrier to recognising the need for survival, as well as a set of limiting or enabling
change, and being able to reconstitute itself conditions for future adaptation. Even though
even if the need is recognised. Supporting this attempts at integration have been made there
apparently contradictory facet of culture, is still very limited consensus regarding a
Denison (1990), in a longitudinal study found universal theory, and a great deal of scepti-
evidence that suggests incoherent and weak cism exists about whether culture can ever be
cultures at one point in time were associated measured in a way that allows one organisa-
with greater organisational effectiveness in the tion to be compared with another.
future, and that some strong cultures eventu-
ally led to decline in corporate performance. Empirical evidence: culture effectiveness
Clearly, balance and understanding of context The empirical work on organisational culture
is important. Cultures with strong drive for can be traced back early to the work of classi-
innovation and change can lead to problems cal organisation theorists such as Burns and
when market circumstances and customer Stalker (1961), Lawrence and Lorsh (1967),
requirements demand predictability and Likert (1961). In more recent times a vast
conforming to specifications. John Scullys base of popular literature on the subject was
rescue of Apple Computers from the innova- started by writers such as Peters and Water-
tive but less predictable culture created by man (1982) in espousing a theory of excel-
Steve Jobs is a good example of the weakness lence, which purports to identify cultural
of a strong culture. characteristics of successful companies.
Generally we can say that because culture Numerous studies have produced evidence
can directly affect behaviour it can help a which highlights the importance of culture to
company to prosper. An innovative culture organisational performance and effectiveness.
can make it easy for senior management to To cite a handful of exemplary studies, Wilkins
implement innovation strategies and plans.. and Ouchi (1983) discuss the concept of
The key benefit is that often it can do things clan organisation and explore the hypotheti-
that simple use of formal systems, procedures cal conditions under which clans would be
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

more efficient organisational forms. Gordon high conformity and little or no dissent.
(1985) highlighted that high and low per- Nonetheless in each case the degree of
forming companies in the banking and utili- consistency of the system is a salient trait
ties industries had different culture profiles. of the organisations culture.
Kotter and Heskett (1992) present an analysis (3) Adaptability, or the capacity for internal
of the relationship between strong cultures, change in response to external conditions, is a
adaptive cultures and effectiveness. Most cultural trait that is positively related to
recently Deshpande et al. (1993) link culture effectiveness. Effective organisations must
types to innovativeness. Deshpande et al., develop norms and beliefs that support
using a synthesis of over 100 previous studies their capacity to receive and interpret
in organisational behaviour, sociology and signals from their environment and trans-
anthropology, define four generic culture late them into cognitive, behavioural and
types: market culture, adhocracy culture, clan structural changes. When consistency
culture and hierarchical culture. Their study becomes detached from the external
appears to suggest that a certain variety of environment, firms will often develop into
cultures are more able to enhance innovative- insular bureaucracies, and are unlikely to
ness than other types. Market and adhocracy be adaptable.
cultures score highly for high performance (4) Sense of mission or long term vision is a
companies, exhibiting a statistically signifi- cultural trait that is positively related to
cant relationship. A study by Goran Ekvall effectiveness. Interestingly this contrasts
(1993) in Sweden further supports the link with the adaptability notion, in that it
between culture and innovativeness. emphasises the stability of an organisa-
More generally, Dennison and Mishra tions central purpose and de-emphasises
(1995) identify four cultural traits and values its capacity for situational adaptability
that are associated with cultural effectiveness. and change. A mission appears to provide
These are briefly defined below: two major influences on the organisa-
(1) Involvement is a cultural trait which is posi- tions functioning. First, a mission pro-
tively related to effectiveness. Involvement of vides purpose and meaning, and a host of
a large number of participants appears to non-economic reasons why the organisa-
be linked with effectiveness by virtue of tions work is important. Second, a sense
providing a collective definition of behav- of mission defines the appropriate course
iours, systems, and meanings in a way that of action for the organisation and its
calls for individual conformity. Typically members. Both of these factors reflect
this involvement is gained through inte- and amplify the key values of the organi-
gration around a small number of key sation.
values. This characteristic is popularly
recognised as a strong culture. Involve- Denison and Mishra (1995) propose that for
ment and participation create a sense of effectiveness, organisations need to reconcile
ownership and responsibility. Out of this all four of these traits. The four traits together
ownership grows a greater commitment to serve to acknowledge two contrasts: the con-
the organisation and a growing capacity to trast between internal integration and exter-
operate under conditions of ambiguity. nal adaptation, and the contrast between
(2) Consistency is a cultural trait that is positive- change and stability. Involvement and consis-
ly related to effectiveness. Consistency has tency have as their focus the dynamics of
both positive and negative organisational internal integration, while mission and adapt-
consequences. The positive influence of ability address the dynamics of external adap-
consistency is that it provides integration tation. This focus is consistent with Scheins
and co-ordination. The negative aspect is (1985) observation that culture is developed
that highly consistent cultures are often as an organisation learns to cope with the dual
the most resistant to change and adapta- problems of external adaptation and internal
tion. The concept of consistency allows integration. In addition, involvement and
us to explain the existence of sub-cultures adaptability describe traits related to an
within an organisation. Sources of inte- organisations capacity to change, while the
gration range from a limited set of rules consistency and mission are more likely to
about when and how to agree and dis- contribute to the organisations capacity to
agree, all the way to a unitary culture with remain stable and predictable over time.
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

The individual and innovation culture associative fluency

fluency of expression
People play a role in organisational culture.
figural fluency
Organisations need to consider the type of
ideational fluency
employees that can most effectively drive
speech fluency
innovation. From a diverse range of research
word fluency
(psychology to management) it has been
practical ideational fluency
found that a core of reasonably stable person-
ality traits characterise creative individuals. A
(Carrol, 1985)
select few of these are listed:
Personality traits for innovation
high valuation of aesthetic qualities in
broad interests (Guildford, 1983)
attraction to complexity
high energy Personal motivational factors affecting
independence of judgement innovation
intuition At the individual level numerous motivation-
self-confidence related factors have been identified as drivers
ability to accommodate opposites of creative production. The key ones are
firm sense of self as creative presented below:
(Baron and Harrington, 1981) Intrinsic versus extrinsic motivation
persistence Intrinsic motivation is a key driver of creativi-
curiosity ty (Amabile, 1990; Baron and Harrington,
energy 1981). In fact extrinsic interventions such as
intellectual honesty rewards and evaluations appear to adversely
(Amabile 1988) affect innovation motivation because they
internal locus of control (reflective/intro- appear to redirect attention from experi-
spective) menting to following rules or technicalities
(Woodman and Schoenfeldt, 1990) of performing a specific task. Furthermore,
Although there appears to be general agree- apprehension about evaluation appears to
ment that personality is related to creativity, divert attention away from the innovation
attempts to try and use this inventory type of because individuals become reluctant to take
approach in an organisational setting as pre- risks since these risks may be negatively evalu-
dictor of creative accomplishments is fraught ated. Contrarily, in order to be creative, indi-
with dangers, and is hardly likely to be any viduals need freedom to take risks, play with
more useful than attempts at picking good ideas and expand the range of considerations
leaders through the use of trait theory from which solutions may emerge.
approaches. Nevertheless it does highlight the Challenging individuals
need to focus on individual actors, and to try Open ended, non-structured tasks engender
and nurture such characteristics or at least higher creativity than narrow jobs. This
bring them out, if necessary, in an organisa- occurs by virtue of the fact that people
tional setting..
respond positively when they are challenged
and provided sufficient scope to generate
Cognitive factors and innovation
novel solutions. It appears that it is not the
Cognitive factors also appear to be associated
individual who lacks creative potential but it is
with the ability to innovate. Research appears
the organisational expectations that exert a
to indicate a number of cognitive factors are
primary debilitating effect upon the individ-
associated with creativity. For example, med-
uals inclination to innovate (Shalley and
ical psychology indicates differences in cogni-
Oldham, 1985).
tive processing, ascribing left cerebral cortex
to rational thinking, and the right brain to Skills and knowledge
intuition. Creativity is affected by relevant skills such as
Cognitive parameters affecting idea pro- expertise, technical skills, talent etc. However
duction are given below: such domain-related skills can have both
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

positive as well as negative consequences. outward looking; willingness to take on

Positively, knowledge enhances the possibility external ideas;
of creating new understanding. Negatively, flexibility with respect to changing needs;
high domain-relevant skills may narrow the non-hierarchical;
search heuristics to learnt routines and there- information flow downwards as well as
by constrain fundamentally new perspectives. upwards.
This can lead to functional fixedness.
At a more macro-level Schneider et al. Mechanistic structures hinder
(1996) suggest that organisations may attract innovation
and select persons with matching styles. rigid departmental separation and func-
Organisational culture, as well as other tional specialisation;
aspects of the organisation, may be difficult to hierarchical;
change because people who are attracted to bureaucratic;
the organisation may be resistant to accepting many rules and set procedures;
new cognitive styles. When a change is forced, formal reporting;
those persons attracted by the old organisa- long decision chains and slow decision
tion may leave because they no longer match making;
the newly accepted cognitive style. Among little individual freedom of action;
other things, this culture-cognitive style communication via the written word;
match suggests that organisational conditions much information flow upwards; directives
flow downwards.
(including training programs) supportive of
creativity will be effective only to the extent
that the potential and current organisational Cultural norms for innovation
members know of and prefer these conditions.
Bearing in mind that the external context
impacts heavily upon innovation and recipro-
Structure and innovation cally, the intrinsic creativity inherent in the
organisation defines its ability to adapt to, and
Although most research appears to agree that
even shape the environment, we can ask how
innovation is influenced by social processes,
can culture promote innovation? Indeed does
research in this area thus far has taken a back
culture hinder or enhance the process of
seat to research on individual differences and
creativity and innovation? The answer is that
antecedents. Generally it can be said that
it simply depends on the norms that are wide-
innovation is enhanced by organic structures
ly held by the organisation. If the right types
rather than mechanistic structures. Innova-
of norms are held and are widely shared then
tion is increased by the use of highly participa- culture can activate creativity. Just as easily, if
tive structures and cultures (e.g. high perfor- the wrong culture exists, no matter the effort
mance-high commitment work systems and good intention of individuals trying to
(Burnside, 1990). For instance, an idea promote innovation, few ideas are likely to be
champion must be made to feel part of the forthcoming .
total innovation; at the very least he/she must A variety of research (Andrew, 1996;
be allowed to follow the progress of the inno- Filipczak, 1997; Judge et al., 1997; OReilly,
vation. This builds involvement via ownership 1989; Picken and Dess, 1997; Pinchot and
and enhances attachment and commitment at Pinchot, 1996; Schneider et al., 1996; Warner
the organisational level. There is also a strong et al., 1997), appear to point to the same set of
case here to let the individual lead the project critical norms involved in promoting and
in a total sense from beginning to end. implementing innovation and creativity.
Norms that promote innovation are pre-
Organic structures promote innovation sented below.
freedom from rules;
participative and informal; Challenge and belief in action
many views aired and considered; The degree of which employees are involved
face to face communication; little red tape; in daily operations and the degree of stretch
inter-disciplinary teams; breaking down required.
departmental barriers; Key attributes:
emphasis on creative interaction and aims; dont be obsessed with precision;
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

emphasis on results; Debates

meet your commitments; The degree to which employees feel free to
anxiety about timeliness; debate issues actively, and the degree to which
value getting things done; minority views are expressed readily and
hard work is expected and appreciated; listened to with an open mind.
eagerness to get things done; Key attributes:
cut through bureaucracy. expect and accept conflict;
accept criticism;
Freedom and risk-taking dont be too sensitive.
The degree to which the individuals are given
latitude in defining and executing their own Cross-functional interaction and
work. freedom
Key attributes: The degree to which interaction across func-
freedom to experiment; tions is facilitated and encouraged.
challenge the status quo; Key attributes:
expectation that innovation is part of your move people around;
job; teamwork;
freedom to try things and fail; manage interdependencies;
acceptance of mistakes; flexibility in jobs, budgets, functional areas.
allow discussion of dumb ideas;
no punishment for mistakes. Myths and stories
The degree to which success stories are
designed and celebrated.
Dynamism and future orientation
Key attributes:
The degree to which the organisation is active
symbolism and action;
and forward looking.
build and disseminate stories and myths.
Key attributes:
forget the past;
Leadership commitment and
willingness not to focus on the short term;
drive to improve;
The extent to which leadership exhibits real
positive attitudes towards change;
commitment and leads by example and
positive attitudes toward the environment;
actions rather than just empty exhortation.
empower people;
Key attributes:
emphasis on quality.
senior management commitment;
walk the talk;
External orientation declaration in mission/vision.
The degree to which the organisation is sensi-
tive to customers and external environment. Awards and rewards
Key attributes: The manner in which successes (and failures)
adopt customers perspective; are celebrated are rewarded.
build relationships with all external inter- Key attributes:
faces (supplier, distributors). ideas are valued;
top management attention and support;
Trusts and openness respect for beginning ideas;
The degree of emotional safety that employ- celebration of accomplishments e.g.
ees experience in their working relationships. awards;
When there is high trust, new ideas surface suggestions are implemented;
easily. encouragement.
Key attributes:
open communication and share Innovation time and training
communication; The amount of time and training employees
listen better; are given to develop new ideas and new possi-
open access; bilities and the way in which new ideas are
accept criticism; received and treated.
encourage lateral thinking; Key attributes:
intellectual honesty. built-in resource slack ;
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

funds budgets; work toward a common end (Collins and

time; Porras, 1991).
opportunities; Despite these concerns , Ledford et al.
promotions; (1994) suggest that if correctly formulated
tools; and expressed, philosophy statements can
infrastructure e.g. rooms, equipment etc; provide three advantages. First, the state-
continuous training; ments can be used to guide behaviours and
encourage lateral thinking; decision making. Second, philosophy state-
encourage skills development. ments express organisational culture, which
can help employees interpret ambiguous
Corporate identification and unity stimuli. Third, they may contribute to organi-
The extent to which employees identify with sational performance by motivating employ-
the company, its philosophy, its products and ees or inspiring feelings of commitment.
customers. Importantly it is worth bearing in mind that
Key attributes: the statement does not have to move moun-
sense of pride; tains to make a cumulative difference in firm
willingness to share the credit; performance. If the individual employees
sense of ownership; become just a little bit more dedicated to
eliminate mixed messages; innovation, exert just a little bit more effort
shared vision and common direction; towards creativity goals, care a just a little bit
build consensus; more about their work, then the statement
may produce a positive return on the invest-
mutual respect and trust;
ment needed to create it.
concern for the whole organisation.
So what makes a statement effective?
According to Ledford et al. (1994), an effec-
Organisational structure: autonomy and
tive statement consists of four basic guiding
principles to bring a statement to life:
The degree to which the structure facilitates
(1) Make it a compelling statement. Avoid
innovation activities.
boring details and routine descriptions.
Key attributes:
(2) Install an effective communication and
decision making responsibility at lower
implementation process.
(3) Creates strong linkage between the
decentralised procedures;
philosophy and the systems governing
freedom to act;
expectation of action; (4) Have an ongoing process of affirmation
belief the individual can have an impact; and renewal.
quick, flexible decision making, minimise
bureaucracy. Leadership and innovation culture
Leading edge organisations consistently
Corporate missions, philosophy innovate, and do so with courage. It is the task
statements and innovation culture of organisational leaders to provide the cul-
ture and climate that nurtures and acknowl-
Having a clear corporate philosophy enables edges innovation at every level. Notwithstand-
individuals to co-ordinate their activities to ing the fact that leadership is critically impor-
achieve common purposes, even in the tant, it is nevertheless insufficient on its own
absence of direction from their managers to build a culture of continuous improvement
(Ouchi, 1983). One effect of corporate state- and innovation. To build a culture of innova-
ments is their influence in creating a strong tion, many innovation champions must be
culture capable of appropriately guiding identified, recruited, developed, trained,
behaviours and actions. However there is also encouraged and acknowledged throughout
a degree of doubt as to whether statements of the organisation.
credo have any value in driving the organisa- In order to build a successful and sustain-
tion forward. Most statements encountered able culture of innovation, leadership needs to
often are of little value because they fail to accomplish two broad tasks. First leaders
grab peoples attention or motivate them to need to be acutely sensitive to their
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

environment and acutely aware of the impact effectively seed a climate conducive to innova-
that they themselves have on those around tion. It is important to note that it is not suffi-
them. This sensitivity enables them to provide cient to only emphasise one or few practices.
an important human perspective to the task at Climates are created by numerous elements
hand and is critical because it is only within coming together to reinforce employee per-
this awareness that the leader can begin to ceptions. Weaknesses or contradictions, even
bridge the gap between leaderspeak and the along single dimensions, can quite easily
real world of organisational culture. The debilitate efforts. For example, if rewards are
second factor is the ability of leaders to accept not structured for innovation but are given for
and deal with ambiguity. Innovation cannot efficient performance of routine operations,
occur without ambiguity, and organisations then no matter how seductive the other cues
and individuals that are not able to tolerate and perceptions are, employees are likely to
ambiguity in the work place environment and respond with caution and uncertainty. This is
relationships reproduce only routine actions. particularly the case because perceptions of
Innovative structures for example cannot have the climate are made on aggregates of experi-
all attendant problems worked out in advance. ence.
Leaders need to build a deep appreciation of Additionally, management create climate
this fact, otherwise there will be a tendency to not by what they say but by their actions. It is
create cultures of blame. Tolerance of ambi- through visible actions over time rather than
guity allows space for risk taking, and explo- through simple statements that employees
ration of alternative solution spaces which do begin to cement perceptions. It is only when
not always produce business results. This employees see things happening around them,
hedges against constant deployment of tried and to things that push them towards innova-
and tested routines for all occasions. Tom tion, that they begin to internalise the values
Peters comes close to the mark in highlighting of innovation. At innovative companies, the
that most successful managers have an unusu- whole system of organisational function is
al ability to resolve paradox, to translate con- geared-up to emphasise innovation (who gets
flicts and tensions into excitement, high hired, how they are rewarded, how the organi-
commitment and superior performance. sation is designed and laid out, what processes
Characteristics that distinguish highly are given priority and resource back-up, and
innovative firms against less innovative com- so on).
panies are as follows:
Top management commits both financial Leadership, innovation and
and emotional support to innovation, and empowerment
they promote innovation through champi-
ons and advocates for innovation. Empowering people to innovate is one of the
Top management has to ensure that realis- most effective ways for leaders to mobilise the
tic and accurate assessments of the markets energies of people to be creative. Combined
are made for the planned innovation. with leadership support and commitment,
Highly innovative firms are close to the end empowerment gives people freedom to take
users, and are accurately able to assess responsibility for innovation. Empowerment
potential demand. in the presence of strong cultures that guide
actions and behaviour produces both energy
Top management ensures that innovation
and enthusiasm for consistent work towards
projects get the necessary support from all
an innovative goal. Employees themselves are
levels of the organisation.
able to devise ways that allow them to inno-
Top management ensures that structured
vate and accomplish their tasks. The only
methodology/systems are set in place so
serious problem with empowerment occurs
that each innovation goes through a careful
when it is provided in an organisation without
screening process prior to actual imple-
a strong value system capable of driving activ-
ities in a unified and aligned manner to the
The above suggests that senior management super-ordinate goals of the organisation. In
play a pivotal role in enhancing or hindering these conditions, empowerment is little less
organisational innovation. If senior manage- than abdication of responsibility, and when
ment are able to install all of the above types responsibility and power is pushed down-
of procedures and practices then they wards, chaos typically ensues.
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

Even with empowerment, innovative They need also to understand the penalties if
actions can be incapacitated. Often people inefficiencies creep into aspects of their task.
encounter organisational barriers which In this way, understanding of risk provides
inhibit innovation. Some typical organisation- clear definition of the priority and space for
al barriers encountered are listed below: innovative actions. Without knowing that risk
self-imposed barriers; tolerance exists within the organisation,
unwarranted assumptions; employees tend not to be willing to try and
one correct answer thinking; innovate, or engage in activities that are a
failing to challenge the obvious; departure from tradition.
pressure to conform; The best way for leaders to define the action
fear of looking foolish. space, is not to be so precise as to discourage
innovation, but to stipulate a broad direction
Killer phrases also abound, a few of which are
which is consistent and clear. This means that
listed below:
as leaders they must be capable of accepting
it will cost too much;
ambiguity, and able to place trust in employ-
we have never done things that way;
ees ability to stretch out to goals rather than
if its that good, why hasnt someone
prescribe details of specific actions which stifle
thought of it before?;
and smother creative actions.
has it been done somewhere else?;
yes, but
Structure involvement
it cant be done that way;
Involvement is not something that just occurs
its impossible;
on its own. Senior management need to design
into their organisations ways of buying involve-
Actions that need to be addressed in order for ment. Involvement requires emotional encour-
the empowerment to contribute to innovation agement, as well as an infrastructure to create
are listed below: possibilities of involvement. Organisational
design and layout can be used to create a physi-
Establish meaningful actions cal environment to enhance interaction.
boundary Awards and special recognition schemes are
For employees to be creative and innovative other mechanisms to encourage buy-in into
they need to understand the primacy of the innovation as a philosophy and way of organi-
innovation agenda, and need to understand sational life. Establishing specific mechanisms
how far they are being empowered to achieve for structured involvement such as quality
these ends. Successful companies need to circles is yet another device to encourage active
draw actions boundary through a process of participation into the programme. Without
explicitly defining the domain of action and direct structures to induce innovation, leader-
the priority, and the level of responsibility and ship commitment to innovation remains an
empowerment provided to reach these ends. empty exhortation and produces empty results.
Most often such transmission occurs through
mission and vision statements. Devised cor- Accountability
rectly, these statements can act as powerful A very common problem in empowered
enablers. Incorrectly, they can be just as innovation is that everyone is encouraged to
powerful disablers breeding cynicism and participate in cross-functional process
discontent. involvement, to an extent that almost every-
body loses track of who is accountable for
Define risk tolerance what. The result of unrestricted and uncon-
Employees need to know the level of risks that trolled empowerment is chaos. As new
they can take safely. This helps them to define processes are put in place then new forms of
the space within which they are allowed to act behavioural guidance must be provided and
in an empowered manner, and the occasions must be accompanied by redefinitions of
when they need to approach organisational responsibility. While empowerment, on the
ratification for engaging in actions. For exam- surface, looks like an unstructured process, in
ple, employees need to understand how much reality it is anything but that. It is in fact a
time they can spend on their pet projects, and clear definition of domains in which the indi-
how much effort they need to ensure that their viduals are allowed to exert creative discre-
routine operations are not made sub-optimal. tion, and the responsibility that they must
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

execute while engaging in their total task as innovative companies behave as focused
employees of the organisation. communities whereas less innovative compa-
nies units behave more like traditional
Action orientation rather than bureaucratic departments. They suggest four
bureaucracy orientation managerial practices that influence the mak-
To ensure that innovation occurs, leaders ing of such goal-directed communities.
must ensure that there are no bureaucratic
bottlenecks which suffocate attempts at inno- Balanced autonomy
vation. One primary culprit of this is overly Autonomy is defined as having control over
bureaucratic procedures for rubber-stamping means as well as the ends of ones work. This
approval or reporting requirements. Faced concept appears to be one of central impor-
with such obstacles, a lot of employee tance. There are two types of autonomy:
initiatives fail. In fact a large proportion of strategic autonomy: the freedom to set
suggestion schemes appear to fail not because ones own agenda;
there is a lack of ideas but because of the operational autonomy: the freedom to
protocols, and the failure of the protocols to
attack a problem, once it has been set by
process with sufficient speed either a
the organisation, in ways that are deter-
favourable or unfavourable response.
mined by the individual self.
Employee innovativeness is not always the
stumbling block often it is the organisational Operational autonomy encourages a sense of
processes and structures which are so burden- the individual and promotes entrepreneurial
some and unwieldy that they create high level spirit, whereas strategic autonomy is more to
of unresponsiveness. Through leadership do with the level of alignment with organisa-
commitment to re-engineer out unfruitful tional goals. It appears that firms that are
elements of bureaucracy, processes and struc- most innovative emphasise operational auton-
ture can lay the foundation for a climate of omy but retain strategic autonomy for top
innovation. management. Top management appear to
specify ultimate goals to be attained but there-
Characteristics of innovation climates after provide freedom to allow individuals to
and cultures be creative in the ways they achieve goals.
Giving strategic autonomy, in the sense of
Despite the interest in the field of innovation, allowing individuals a large degree of freedom
much of the research evidence concerning to determine their destiny, ultimately leads to
management practices about innovation
less innovation. The results of strategic auton-
cultures and creative climate remains unsys-
omy are an absence of guidelines and focus in
tematic and anecdotal. As mentioned earlier,
effort. In contrast, having too little opera-
the importance of culture has been empha-
tional autonomy also has the effect of creating
sised by organisational theorists such as Burns
imbalance. Here the roadmaps become too
and Stalker (1961), who present a case for
rigidly specified, and control drives out innov-
organic structures as opposed to mechanistic
ative flair, leading eventually to bureaucratic
structures. In popular literature, Peters and
Waterman (1982), similarly present argu- atmospheres. What works best is a balance
ments which suggest that in order to facilitate between operational and strategic autonomy.
innovation, work environments must be
simultaneously tight and loose. Burlgeman Personalised recognition
and Sayles (1986) highlight the dependency Rewarding individuals for their contribution
of innovation with the development and to the organisation is widely used by corpora-
maintenance of an appropriate context within tions. However, while recognition can take
which innovation can occur. Judge et al. many forms there is a common distinction:
(1997) in presenting findings from a study of rewards can be either extrinsic or intrinsic.
R&D units compare cultures and climates Extrinsic rewards are things such as pay
between innovative and less-innovative firms increases, bonuses and shares and stock
and argue that the key distinguishing factor options. Intrinsic rewards are those that are
between innovative and less innovative firms is based on internal feelings of accomplishment
the ability of management to create a sense of by the recipient. For example, being personal-
community in the workplace. Highly ly thanked by the CEO, or being recognised
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

by the peer group, being awarded an award or Continuity of slack

trophy. Slack is the cushion of resources which allows
Innovative companies appear to rely heavi- an organisation to adapt to internal and exter-
ly on personalised intrinsic awards, both for nal pressures. Slack has been correlated posi-
individuals as well as groups. Less innovative tively to innovation. Judge et al. (1997) note
companies tend to place almost exclusive that it is not just the existence of slack but the
emphasis on extrinsic awards. It appears that existence of slack over time that appears to
when individuals are motivated more by have positive impact upon innovation. They
intrinsic desires than extrinsic desires then find less innovative firms have slack but these
there is greater creative thought and action. firms appear to have experienced significant
Nevertheless, it has to be stated that extrinsic disruptions or discontinuities of slack in their
rewards have to be present at a base level in past or were expecting disruptions in the
order to ensure that individuals are at least future. Therefore innovativeness seems to be
comfortable with their salary. Beyond the base linked with both experience and expectations
salary thresholds it appears that innovation is of slack resources. It can be hypothesised that
primarily driven by self-esteem level rather slack, and future expectations of uninterrupt-
than external monetary rewards. It appears ed slack, provide scope for the organisation
that extrinsic rewards often yield only and its members to take risks that they would
temporary compliance. Extrinsic rewards not take under conditions of no slack, or
promote competitive behaviours which dis- interruptions in slack. Organisationally, this
rupt workplace relationships, inhibit openness would appear to indicate the need for generat-
ing a base-line stock of slack in a variety of
and learning, discourage risk-taking, and can
critical resources (such as time and seed
effectively undermine interest in work itself.
funding for new projects).
When extrinsic rewards are used, individuals
tend to channel their energies in trying to get
the extrinsic reward rather than unleash their Conclusion
creative potential.
In attempting to build an enduring company, it
is vitally important to understand the key role
Integrated socio-technical system
of the soft side of the organisation in innova-
Highly innovative companies appear to place
tion. Companies like IBM and Apple saw their
equal emphasis on the technical side as well as
fortunes overturned because of their inability
the social side of the organisation. In other
to focus upon innovation, and more important-
words, they look to nurture not only technical
ly to understand the importance of culture and
abilities and expertise but also promote a
climate in innovation. Apple Computers, after
sense of sharing and togetherness. Fostering the departure of Steve Jobs, encountered
group cohesiveness requires paying attention dramatic failure despite its focus upon innova-
to the recruitment process to ensure social tion. One of the reasons for this, was that its
fit beyond technical expertise, and also leaders narrowly focused their total efforts in
about carefully integrating new individuals trying to come up with the next great innova-
through a well-designed socialisation pro- tion. Instead, their time would have been better
gramme. Less innovative firms on the other spent designing and creating an environment
hand appear to be more concerned with that would be able to create innovations of the
explicit, aggressive individual goals. Less future. Companies aspiring towards innovative
innovative firms tend to create environments goals need to learn from the examples of highly
of independence, whereas innovative ones successful companies like 3M, The Body Shop
create environments of co-operation. Highly whose leaders spend their energy and effort in
innovative companies also appear to place building organisational cultures and climates
much more reasonable goal expectations, and which perpetually create innovation.
try not to overload individuals with projects. In accepting this viewpoint, the key ques-
The prevalent belief being that too many tion in innovation begins to change from the
projects spread effort too thinly, leading traditional issue of focusing effort on the next
individuals to step from the surface of one to great innovation to one which asks whether
the next. These conditions create time pres- you are creating an environment that stimu-
sures which militate strongly against innova- lates innovation. Are you simply focusing on
tiveness. your product portfolio or are you focused on
Culture and climate for innovation European Journal of Innovation Management
Pervaiz K. Ahmed Volume 1 Number 1 1998 3043

building a culture that cannot be copied? Are Ekvall Goran (1993), Creativity in project work: a longitu-
you busy inventing a narrow base of products, dinal study of a product development project,
or are you experimenting with creating innova- Creativity and Innovation Management, March,
tiveness? Without doubt the most innovative pp. 17-26.
companies of the future will be dominated by Gordon, (1985), The relationship between corporate
those that do not simply focus energies upon culture to industry sector and corporate perfor-
mance, in Kilman, R.H., Saxton, M.J., Serpa, R. and
product and technical innovation, but those
asscoc. (Eds), Gaining Control of Corporate Culture,
who have managed to build enduring environ-
Jossey-Bass, San Francisco, CA.
ments of human communities striving towards
Guildford, J.P. (1983), Transformation abilities or func-
innovation through the creation of appropriate
tions, Journal of Creative Behaviour, Vol. 17,
cultures and climate. This will be the energy of pp. 75-83.
renewal and the drive to a successful future.
Judge, W.Q., Fryxell, G.E. and Dooley, R.S. (1997), The
new task of R&D, management: creating goal
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