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Knowledge@Australian School of Business

The Shock of the New: How Companies Bring on Big Ideas

Published: September 27, 2011 in Knowledge@Australian School of Business
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"The use of imagination or original ideas to create something; inventiveness." When the dictionary definition of creativity is considered, it's surprising that the majority of companies devote so little time to it. Rarely are employees "genuinely" encouraged to think about how to be more creative with the products or services they deliver.

"Many companies are managed for control and efficiency, and this stifles creativity," asserts Saul Brown, managing director of 2b Consulting who teaches executive programs at the Australian Graduate School of Management. "Creativity exists in every organisation because it's a natural human capacity, albeit that some people may be more creative than others," he says. "But creativity inherently involves novelty, whereas most management structures are geared towards standardisation and predictability. Most leaders understand this conceptually, but do not fully appreciate the changes to management practices required to foster creativity and, ultimately, successful innovation."

It's important to distinguish between creativity – the initial inspiration and ideas phases – and innovation – when the new ideas are selected, developed and implemented, emphasises Brown who runs programs to improve business and organisational performance through innovation and entrepreneurship."Different individual and team processes and management or leadership approaches are required at different phases."

Management practices for optimal creativity are more empowering and facilitative. They tend to make managers uncomfortable – and "many don't have the requisite process skills," Brown observes.That's why, he says, so many companies are unsuccessful in their attempts to harness creativity.

However, sometimes creativity rears its head in unexpected places. "When you think of the energy sector, creativity is probably not the first thing that leaps to mind," admits Rod Taylor, brand and marketing services manager at Aurora Energy, a Tasmanian government-owned company that generates, distributes and retails electricity, and delivers wholesale telecommunications services using optical fibre networks.

"Providing a culture of facilitating creativity and turning that into strategy are often two separate issues," observes Taylor. But at Aurora they have managed to marry the two.

One creative epiphany at Aurora was involving staff in the launch of a marketing and advertising campaign. Communication was key, says Taylor. Employees were invited to view the company's new ads at cinema sessions. Chief executive Peter Davis was on hand to answer questions afterwards. About 80% of staff attended, many with family and friends. "[The events] turned the employees into brand ambassadors," Taylor says. "Instead of getting random phone calls from the public talking about an ad most of the staff hadn't seen, not only had they seen the ad but they understood the context around it. The slogan of 'No one matches our energy' was embraced by the staff and it helped them to sell the message." The dominant household energy supplier in Australia's smallest state now has national marketing awards to show for it.

Another example Taylor cites is Aurora Energy's ongoing partnership with the Asthma Foundation to help the general public replace wood heaters with electric ones. "Coming from us it sounded like a hard sell but working with the Asthma Foundation gave the message credibility," Taylor points out. "We dropped the price to encourage people to buy our electric heaters and to help the community. The campaign only came to fruition because we are encouraged to be creative in the workplace." Running since 1995, the campaign has had quantified success. In 2011 Aurora Energy has 67% of Tasmania's home heating market. Back in 1993, it was at a low 27%.

Identifying Drivers

Creativity and innovation in business are normally driven by macro and micro economic factors, states Brown. "Economists have long recognised that innovation is driven by external changes and customer demand. Creativity and innovation usually peak when there are major changes in the business environment.

"Most recently it has been the Internet-powered information revolution, giving birth to Google, Facebook, Apple with their devices and applications and changing the way we communicate, use media and listen to music … At the same time, [the innovation is] threatening and destroying traditional industry players in the media and entertainment industry." The pace of innovation today is fast, Brown says, pointing to the example of Finnish mobile phone company Nokia – a relatively young market heavyweight that has lost significant market share over the past few years, since the launch of smart phones, and is now experiencing extreme difficulties.

Companies intent on encouraging creativity and innovation may need to adapt their approaches to flexible working, allowing employees to work beyond their normal parameters, both geographically and time-wise. Alternatively, they may need to create a specific environment in which creative smarts can flourish. "Famously, Google gives some employees time off to pursue ideas of their choice with no pressure other than to connect those ideas to Google's business in some way in the future," Brown says. "Companies such as Procter & Gamble run creativity and innovation as a portfolio of activities in parallel with the business-as-usual activities, while others keep new ventures separate, allowing them to emerge away from the broader managerial pressures of the organisation." Commonwealth Bank of Australia subsidiary CommSec, which began in 1995 as an over-the-phone share-trading platform, emerged in this way, Brown notes. "While some work hard to build more creativity into their existing culture and recognise ideas right through the business, others give up and look to acquire proven innovative businesses," he says.

Global infrastructure, finance and media company GE sums up its approach with the slogan, "imagination at work". "Creativity is expected on a day-in, day-out basis," insists Simon Beckett, GE Money general manager, who claims it's part of the corporate heritage. "The reality is that innovation grows market capitalisation," he says.

In June 2011, GE established an innovation council to keep ideas rolling. The council, comprised of five executives, has three set agendas: first, to embed innovation within the organisation; second, to co-ordinate an approach to creative thinking; and third, to generate growth. In addition, GE runs an innovation café where business leaders can pitch ideas and also social media sites that encourage ideas from everyone.

"We built a website and have asked employees to register and submit their ideas, which are then voted on by their colleagues," Beckett says. "The best ideas win an iPad." Amazingly, says Beckett, 1200 employees registered for the site. "Of all the ideas submitted – and there were hundreds – we hope to implement 40."

GE has a willingness to think differently. "We also challenge boundaries and that can result in failure but that is important, as it is part of a learning process," says Beckett. "The reality is that a great idea can come from anywhere within the organisation, so you should always encourage it."

Dodging Barriers

Conversely, most companies put in place barriers that impede creativity as they try to control the process, Brown says. "Particularly in the creative phases of innovation, research indicates that external demands reduce creativity. So the tendency is to try to apply rational linear decision-making to pick 'the next big thing' – but creativity and innovation don't work like that. [The process] is much more emergent and iterative." Brown points out that designers are trained to understand how multiple ideas need to be prototyped and developed, and that some will inevitably fail – and fail early. From those failures, they learn and improve.

Failure is important to the process, Beckett agrees. "But most companies don't think like this. They are taught to make good quick decisions based on what has worked in the past. Creativity and innovation take time and come with no guarantees."

Typically companies get it wrong from the outset, confirms Jeffrey Tobias, managing director of the Strategy Group and a lecturer at the Australian Graduate School of Management. "Culture and innovation are joined at the hip," he advises. "Most organisations say they have an innovative culture but they don't."

Five qualities are required to establish the right culture for innovation in a workplace, according to Tobias. First, trust is required. "You have to trust each other enough to share ideas, which can be built upon. Second, you need an environment in which people can disagree, but also are able to resolve conflict because innovation will lead to disagreement, not everyone will agree with new ideas. Third, you need to build a discovery process, otherwise it won't happen. Fourth, an organisation needs to establish a culture of risk-taking and tolerance of failure. "Most organisations champion success, but bury failure," Tobias points out. "Lastly, there needs to be a sharing of responsibility enabling each member to not only share ideas but also to ask for help."

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