After reading this chapter, you should be able to answer the following questions: What is organizational culture? How do you understand an organizational culture? How can we manage organizational culture and innovation? What is innovation and why is it important?
Chapter 15 Organizational Culture and Innovation Trust builds performance bonds Chapter 15 Learning Objectives What is Organizational Culture? How you understand an Organizational Culture? How can we manage organizational culture and innovation? What is innovation and why is it important? Copyright © 2014 John Wiley & Sons, Inc 15-2 What is organizational culture? Organizational culture • The system of shared actions, values, and beliefs that develops within an organization and guides the behavior of its members Copyright © 2014 John Wiley & Sons, Inc 15-3 What is organizational culture? External adaptation • Knowing ways of reaching goals • Knowing the tasks and methods to achieve goals • Methods of coping with success and failure Copyright © 2014 John Wiley & Sons, Inc 15-4 What is organizational culture? Important aspects of external adaptation • Separating, or prioritizing, external forces based on their importance • Developing ways to measure accomplishments • Creating explanations for not meeting goals Copyright © 2014 John Wiley & Sons, Inc 15-5 What is organizational culture? External adaptation questions: • What is the real mission? • How can we contribute? • What are our goals and how we reach them? • What external forces are important? • How doe we measure results? • What we if specific targets are not met? • How we tell others how good we are? • How will we know when to quit? Copyright © 2014 John Wiley & Sons, Inc 15-6 What is organizational culture? Internal integration • The creation of a collective identity • Finding ways of working and living together Copyright © 2014 John Wiley & Sons, Inc 15-7 What is organizational culture? Important aspects of working together: • Deciding how to allocate power, status, and authority • Establishing a shared understanding of who will get rewards and sanctions for specific types of actions • Working out ways to communicate and develop guidelines for friendships Copyright © 2014 John Wiley & Sons, Inc 15-8 What is organizational culture? Internal integration questions: • What is our unique identity? • How we view the world? • Who is a member? • How we allocate power, status, and authority? • How we communicate? • What is the basis for friendship? Copyright © 2014 John Wiley & Sons, Inc 15-9 What is organizational culture? Subculture • A group of individuals who exhibit a unique pattern of values and a philosophy that is consistent with the organization’s dominant values and philosophy Copyright © 2014 John Wiley & Sons, Inc 15-10 How you understand an organizational Shared values culture? • Help turn routine activities into valuable and important actions • Tie the organization to the important values of society • May provide a very distinctive source of competitive advantage Copyright © 2014 John Wiley & Sons, Inc 15-19 How you understand an organizational Shared Values culture? Copyright © 2014 John Wiley & Sons, Inc 15-20 How you understand an organizational Characteristics of strong cultures culture? • A belief that ritual and ceremony are important to members and to building a common identity • A well-understood sense of the informal rules and expectations so that employees and managers know what is expected of them • A belief that what employees and managers is important and that it is essential to share information and ideas Copyright © 2014 John Wiley & Sons, Inc 15-21 How you understand an organizational culture? Organizational myths • Unproven and often unstated beliefs that are accepted uncritically Enable managers to redefine impossible problems Facilitate experimentation and creativity Allow managers to govern Copyright © 2014 John Wiley & Sons, Inc 15-22 How you understand an organizational culture? Managing Organizational Culture • Management Philosophy – links key goal-related issues with key collaboration issues to come up with general ways by which the firm will manage its affairs Copyright © 2014 John Wiley & Sons, Inc 15-23 How you understand an organizational culture? Goal Types by definition • Societal Goals represent an organization’s intended contributions to the broader society • Output Goals define the type of business an organization is in • Mission Statements are written statements of organizational purpose • System Goals are concerned with the conditions within the organization that are expected to increase the organization’s Copyright © 2014 John Wiley & Sons, Inc 15-24 How to manage organizational culture and innovation? Strategies for managing organizational culture • Managers help modify visible aspects of culture, such as language, stories, rites, rituals, and sagas • Through reward systems – two common patterns: Steady state (hierarchical, ‘clan’ cultures) Evolution and change (market culture) • By setting the tone of the organization Copyright © 2014 John Wiley & Sons, Inc 15-25 How to manage organizational culture and innovation? Common mistake in changing culture • Trying to change people’s values from the top down without also changing how the organization operates and recognizes the importance of individuals does not work very well Copyright © 2014 John Wiley & Sons, Inc 15-26 How to manage organizational culture and innovation? Organizational lag • The dominant cultural patterns are inconsistent with emerging innovations • Cultural change is hampered by a legacy of established behaviors, with an overreliance on rule following and reinforcement of old patterns of action Copyright © 2014 John Wiley & Sons, Inc 15-27 How to manage organizational culture and Techniques for overcoming ‘cultural lag’ and innovation? promoting innovation: • Demonstrate how shared values and common assumptions can be applied to new innovations Balance rulechangingwith rulefollowing Copyright â 2014 John Wiley & Sons, Inc 15-28 What is innovation and why is it so important? Innovation • The process of creating new ideas and putting them into practice Copyright © 2014 John Wiley & Sons, Inc 15-29 Figure 15.2 The innovation process Copyright © 2014 John Wiley & Sons, Inc 15-30 What is innovation and why is it so important? Product innovations • Introduce new or improved goods or services to better meet customer needs Process innovations • Introduce new and better methods and operations Copyright © 2014 John Wiley & Sons, Inc 15-31 What is innovation and why is it so important? Innovation is a continual process of: • Exploitation Focuses on refinement of and reuse of existing products and processes • Exploration Calls for the organization and it managers to stress freedom and radical thinking, opening the firm to big changes – what some call radical innovations Copyright © 2014 John Wiley & Sons, Inc 15-32 Figure 15.3 Purposeful unintended consequences arising from organizational myths Copyright © 2014 John Wiley & 15- ... 2014 John Wiley & Sons, Inc 1 5-1 6 How you understand an organizational Sagas - Heroic accounts of organizational culture? accomplishments Rites - Standardized and recurring activities that... times to influence the behaviors and understanding of organizational members Rituals are systems of rites Copyright © 2014 John Wiley & Sons, Inc 1 5-1 7 How you understand an organizational Cultural symbols... employees and managers is important and that it is essential to share information and ideas Copyright © 2014 John Wiley & Sons, Inc 1 5-2 1 How you understand an organizational culture? Organizational myths