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by Geof Cox (published as Chapter 3 in The Gower Handbook of Management, Fourth Edition,Gower, Aldershot, 1998)
The creative organisation requires two dimensions to be successful, firstly it needs to be able to attract and get the best out of creative people, secondly it needs a process to harness that creativity and translate it into products and services that customers want. The first dimension requires the organisation to not just recruit and manage creative people, but also to release the creativity of its existing workforce. In the latter, the organisation is treading a delicate path between fostering a climate of creativity and the reality of business survival.
This chapter looks at how to structure and balance an organisation to be creative and innovative - and to survive. It also looks at the management of creativity within the organisation - how to attract and release it. In focusing on these two aspects of the creative organisation, the chapter draws on the experience and practice of some of the leading innovative organisations across the world.
Building a creative organisation
Few organisations will argue that they need be creative in order to survive in today's ever changing environment. But just being creative is not enough. Creativity on its own does not translate directly into survival or success. Creativity is the process that comes up with new ideas. Just having a new idea does not mean that it is either practical, useful or profitable. In fact it is often the impractical, frivolous and outrageous ideas that generate more creative thought, as in brainstorming or lateral thinking activities. An organisation that does not have some form of critical analysis process to screen and translate the ideas into practical benefit for themselves and their customers will soon flounder. The real need for organisations is innovation - the process of applying creative ideas in a practical way to improve the organisation.
No organisation can survive without innovation. There must be an adaptive process that allows the organisation to take on board new ideas and translate them into practical results that benefit the organisation. Which means that it is possible for an organisation to be innovative without being creative in its own right. It can buy in new ideas from outside from inventors, researchers and consultants. There are a large number of successful companies, with many Japanese examples amongst them, who actively seek alliances with universities and with individuals to take and license the practical development of the ideas that emanate from their research programmes.
Another, more systematic approach to buying in creative ideas is to participate in benchmarking. Benchmarking is a process in which companies compare their operations, products and services against others in their industry in order to learn how to do things better. It was developed into a real business tool by the Xerox Corporation when they were confronted with the threat of being completely annihilated by their Japanese imitators. They set about learning what their competitors did better than themselves, and implementing the necessary improvements. They discovered, for example, that their rivals were using far fewer components in their machines, therefore reducing the manufacturing cost, and also the potential for breakdown. By introducing a number of innovations to their own products and processes as a result of the benchmarking programme, Xerox were able to recover from their critical position and retain a substantial market share of the copier market. They have since gone on to develop the process of benchmarking to focus on what organisations in other industries do that they can learn from, and now aim to be world class in all aspects of their operations. Many other organisations now use benchmarking as a systematic tool to improve their operation and keep competitive.
So, ideas do not have to be developed by internal resources, but without some degree of original creative thinking inside an organisation it will always be playing `catch-up'. In an environment where many organisations cut down the numbers of their suppliers to reduce costs and improve quality control, and where we see the demise of the small high street retailer in the face of the competition from out-of-town shopping malls, `catch-up' may not be a viable long-term strategy.
What is essential is that the organisation recognises the need for innovation and has a clearly defined strategy for identifying new ideas and translating them into practical innovations. This is where the organisation culture - `the way we do things around here' - plays a vital role. Some organisations have a culture that fosters creativity and innovation, positively demanding that their staff take risks and question everything that they do. Every innovation incurs a degree of risk taking, and with it the expectation that some ideas will not work. Faced with this most organisations will attempt to reduce the level of risk, but some organisations seem to be determined want to reduce the level of risk to nil, thus ensuring that there is no creativity. In these organisations any new idea that does emerge is quickly put down by an attitude of `not invented here', `it won't work in this environment', `we've tried this before, and it didn't work', `yes ... but' or some other similar killer phrase. At the other extreme, no risk assessment will mean the organisation could stake its whole future on flights of fancy which could prove disastrous. What is needed is some degree of balance between these two extremes.
Ready - Aim - Fire
Ready - Aim - Fire as a well balanced problem solving and decision making process relies on following a process of gathering information and ideas, analysing them in order to make the best decision about the solution or strategy, before implementing that solution: Ready - Aim - Fire (Cox, 1995). Most organisations have an imbalance in this process due to a combination of their own organisation culture and the aggregate of the personal preferences of their staff. In order to establish a creative or innovative organisation, we have to first understand what is the predominant climate and process in our existing organisation.
Ready - Aim - Fire is a military analogy: you first need to know the target and have the appropriate information and resources. Then you need to take aim before going into action. Get one of these steps wrong, or miss it out completely often has catastrophic consequences. Whilst I am not suggesting that organisations should be run on military lines, there are a number of parallels and lessons that can be applied. We can use the Ready - Aim - Fire approach to understand our own natural tendencies and to correct them to something that has creativity and innovation built in.
First we need ideas: the Ready stage. Identify what needs to be done and gather all the information and ideas available. If your organisation does not have creative people already, then look outside to benchmarking or bring in that expertise through consultants. Then Aim - choose the best solution or strategy. Filter and analyse the ideas to come up with something that is practical and meets the organisation's objectives. This is a process of screening and building ideas into something that is workable, not a process of killing them. Then go into action - Fire.
Most organisations are imbalanced. We recruit in our own image, or the image of one or two of the organisation's more prominent opinion leaders or successes. That is to say that the organisation will tend to keep on recreating the style that made it successful. Unfortunately, as we have seen with the demise of many of the excellent organisations identified by Peters and Waterman in `In Search of Excellence', past success is no guarantee of future success. Organisations that have thrived on getting things done will over-recruit people into the Fire stage, and thereby ensure that new ideas or ways of doing things will not be implemented - people will be too busy doing to think about what they are doing now. Even if they decided that they needed to employ creative people, the incumbent management will find it difficult to identify the skills and competencies necessary for the role; and even if they were lucky in recruiting someone, the existing climate of the organisation would drive out the creative as a `misfit' before too long.
Sometimes having an imbalance is a positive benefit. For instance, a creative agency famous for its radical ideas will want to continue to recruit creative people and have a bias towards a Ready - Ready - Ready approach. Similarly a construction contractor would want people who got on with the job and planned the execution and finishing of each contract (Fire - Fire - Fire). If these organisations did not have this bias, then the basis for their success is lost. However, that does not mean that the construction company does not need to innovate to stay ahead or keep abreast of their competition. Having an action oriented culture of Fire - Fire - Fire does not help them to, say, identify the need for and implement a new computerised accounting system without which their costs and inventory will remain higher than their competitors. Not having a tradition of creativity will mean that they will find it difficult to identify the initial need and then develop an innovative solution.
Ready - Fire - Aim
If Ready - Aim - Fire is the balanced culture for organisations to aspire to, truly innovative organisations follow a different pattern: Ready - Fire - Aim. Come up with an idea (Ready) - try it out immediately in a low risk or pilot project (Fire) - and learn from this experiment (Aim). Then use the learning to redesign and refine the idea.
Management gurus like Peter Drucker, Henry Mintzberg and Tom Peters implore us to allow people in organisations to pilot their ideas, try something out and then correct the design or plan when they have learned from the initial mistakes. Allowing people to make mistakes without fear of retribution is seen to be the way to question the status quo and shake organisations into the new economic reality. Unfortunately, there is a climate of fear that exists in many organisations that do not allow people to make mistakes, and therefore learn. They want the 99% success, but often find that they have left it too late. The innovative organisation experiments and positively demands that its employees make mistakes. The Ready - Fire - Aim process is all about trying out new ideas in a small way, in a controlled situation, and learning quickly from the experience to make an adjustment and go round the cycle again. This way losses are minimised by keeping pilot operations at a small level, and the organisation creates a culture where it is OK to test out your own ideas and make mistakes.
Japanese companies are past masters of innovation. They collect customer information at an alarming level, and produce product enhancements and innovations at a startling rate. Sony bring out 1,000 new products a year. That's an average of four new products for every working day. Some 80 per cent are improvements or enhancements to existing products — usually new features with better performance at a lower price. The other 20 per cent are aimed at totally new markets. They haven't lost their ability to experiment as a result of market dominance - they continue to learn from their experiences and are ready and able to make changes to their product line. The Toyota Creative Idea Suggestion Scheme collects about 2 million ideas per year from its workforce - a staggering figure when compared with suggestion schemes in most Western companies. Even more staggering is the participation and take up rates: an average of over 400 suggestions per worker of which 95 per cent are implemented.
For a model of an innovation culture of Ready - Fire - Aim in a Western company, the 3M Company stands out. The company that introduced us to the Post-It note allows its researchers and scientists to divert money from approved budgets to work on new ideas that have not been sanctioned or approved by management. This gives the researchers the freedom to pursue their own whims and fantasies, and, if they come to naught, drop them before anyone is aware. From these whims and fantasies comes an occasional world-beating, innovative product, like the Post-It note, now a $200 million product line for 3M. The Post-It note took twelve years to move from idea to practical innovation, and for most of that time the project had no official status or funding. It was, in the 3M terminology, a `skunkwork' - a project funded from other agreed projects, and being sustained through the belief of a champion, in the case of Post-It a researcher named Art Fry.
But Ready - Fire - Aim is a dangerous concept to add onto a traditional management culture. It becomes a slogan rather than a process, and ill-conceived ideas are implemented in the name of innovation. The traditional approach of `one right way' and `no mistakes' does not marry well with experimentation and learning from errors. Instead of rapid experimentation and pilot programmes, full scale change is tried, with disastrous results. The management culture then reverts to its original process, having proved conclusively that the new way `won't work here'
Busting bureaucracy
While the 3M Company promotes skunkwork, other organisations have fostered innovation by organising themselves in different ways. One favoured route is to break down the bureaucracy that usually follows any mature organisation, taking the model of the fast growing and quick-reacting new organisations typified in Silicon Valley and elsewhere.
Creative organisations abhor bureaucracy and order. They seem to thrive on the unconventional and in throwing away the `normal' trappings of organisation. As stand alone businesses, these creative organisations usually provide a creative service: consultancy firms, research organisations, advertising agencies, inventors and gurus. They are used by other organisations to provide a creative spark, especially when under competitive pressure. Inside organisations, pockets of creativity are often found in product development, marketing, design and research departments.
Creative organisation's offices (if they have them) are cluttered and untidy, often full of toys and distractions that help to provide a creative boost; their employees dress in an unconventional way, they talk a different language and they are forever wanting to make changes and try out new ideas. Their approach helps them to be creative, and is tolerated by `straighter' business people as a necessary evil. The creative organisation or department is constantly in flux. Any study of the advertising agency world will show a bewildering series of mergers and take-overs alongside new agencies being set up by small teams spinning off from major firms, and individuals moving from employment to freelance work.
Imagination, a British based creative company, is a leading example of the creative organisation at its best. It is a mix of architects, designers, computer experts, model builders, PR people, video producers, artists, photographers and other creative people who come together into a project team whenever, and wherever they are needed, ignoring any functional relationships. The projects that they implement range from product and sales promotions, through theatrical productions, the design and construction of exhibitions, galleries and offices, to the concept and design for the Millennium celebrations in Greenwich, England. The company is led by Gary Withers, who acts like a corporate butterfly, floating around the organisation providing the creative spark where necessary, but with no line authority.
The organisation at Imagination does not really exist, except in its flexibility. They recruit people who are good (who they define as someone who has the personal characteristics to fit into their style of work, rather than any form of formal qualification or experience), often without having a specific job available at the time. People move around freely picking up tasks that interest them and making a difference. Imagination is in fact just a collection of creative projects. Their primary function, as the company name suggests, is to harness the imagination of the Imagineers (as they call themselves).
By definition a creative organisation is at the leading edge, always seeking new paradigms, so it can easily lose touch with reality. Imagination keeps this tendency in check by being close to its customers - so close that Imagineers are to be found in project teams that include customers as full members, they are often based in customer's premises, and their flexibility and informality allows customers to feel able to test ideas without fear of losing face or appearing naïve.
Releasing the potential of employees
Project based structures like Imagination are being increasingly used to break up the bureaucratic systems that can so easily develop, even in small organisations. Instead of having a traditional hierarchy and set of reporting relationships, where the tasks are performed by people who are functional specialists, projects are established across functional lines relative to the needs for that project. So a project to design a new product would have members from research, development, production, marketing, sales and finance working together from the outset. When the project is complete, the team dissolves and the people join other projects. These new organisations are often called adaptive, as they are flexible enough to allow the form to follow the task that needs to be done. By operating this way, organisations are finding that they can not only attract and retain creative staff, but also that they can unleash the potential creativity in all of their staff.
The key to making these structures work and making the organisation successful is involvement. Listening to employees and customers, suppliers and partners in such a way that everyone can contribute and participate in designing systems and processes that work. Companies like IBM have been saying, for years, that many of the best product ideas and innovations come from customers, not from the wizards in the research department. Yet many years on, `listening to the customer' for many organisations still means telling them what they want and assuming their requirements. It seems that the less hierarchically structured organisations have a better chance of getting close to the customer and capitalising on this competitive and innovative edge.
Even corporations that are the size and complexity of General Electric have been fostering employee participation and busting bureaucracy, and have been doing it on a massive scale. In the early 1990s, Chief Executive Jack Welsh started to tap into the employee's brainpower by breaking down the old management style - `We've got to take out the boss element.' Welsh says. We're going to win on our ideas not by whips and chains.' His three weapons were called Work-Out, Best Practices and Process Mapping. They are tools that can be used by any organisation that is trying to make itself more fit for the current needs of the fast cycle information society.
Work-Out is an activity which takes people from a complete department or function away from the workplace for a couple of days to identify what is going wrong in their area and come up with potential solutions. It is a problem solving activity on a large scale over a short time period. It is not hierarchical, so it unlocks the barriers that keep staff members out of the decision making process. On day three, the boss of the section returns(Jack himself when this is a total company Work-Out with representatives from across GE). The teams who have been working on proposals to address the issues that they have identified present their ideas. The boss, on the spot, has to either agree, say no, or ask for more information (in which case he must sponsor a team to do it by an agreed date). In a normal Work-Out, the boss has to respond to over 100 proposals, allowing about one minute of thinking time for each. Typically 90 per cent plus of proposals are accepted immediately. Hundreds of thousands of dollars of improvements are implemented each time a Work-Out is called. Ideas and improvements that in a traditional organisation would never make it past the first line supervisor level before someone would squash them flat.
Best Practices for GE was the way to overcome the `not invented here' syndrome. It is the benchmarking that many companies undertake pushed a little further. It looks at the attitudes and processes that underpin the most successful organisations, not the nuts and bolts of operational practice. Best Practices identified that the features common to most successful companies was measuring how one did something not what they did. So, GE altered its audit and reporting methods to focus on processes and management practice not accounting and control, then backed this change with their third initiative: Process Mapping.
Looking at and mapping processes makes organisations rethink the way they do things. You look at the flow of work across functional departments, not the efficiency in each department. Process Mapping identifies and records every step taken in the completion of an operation from the order office receiving an enquiry call to the product being installed on the customer's premises. Every step is mapped and checked, by the people who work in the process. Then they look for and implement improvements to speed up and simplify the flow.
Summary
The successful creative organisation is one that can innovate, as it is innovation - translating creative ideas into practical improvements which meet the organisation's mission - which will enable an organisation to survive and succeed. To be innovative one needs to have a source of ideas and a process for analysing and implementing them. In order to effectively analyse and implement ideas, an organisation must understand its existing bias and culture. In addition it must seek to balance its natural tendency which may be towards action for its own sake, `paralysis of analysis', or the chaos of too many ideas. Each of these biases is just as fatal for the organisation as the others, unless your organisation is specifically formed to exploit that strength.
A style of Ready - Aim - Fire will provide most organisations with a balanced approach to be able to cope with most problems. An organisation which encourages the more innovative style of Ready - Fire - Aim, which fosters experimentation and controlled risk taking will be more successful in staying ahead of its competitors.
New ideas, essential for an organisation to survive, are not necessarily generated from within. Alliances with creative organisations will provide a source of new ideas, as can the systematic surveying of best practices through benchmarking other organisations. In order to move beyond `catch-up' there needs to be some home-grown creative thought, and this can be provided by ensuring that creative people are provided with the environment that attracts and encourages them. Generally speaking, this involves lack of formal controls and bureaucracy. The breakdown of organisation hierarchies and traditional control structures which has a motivating effect for creative people also has the effect of releasing the latent creativity of your own staff, previously barred from the decision making process by bureaucracy.
FURTHER READING
Brown, Mark, The Dinosaur Strain, Element Books, Shaftesbury, 1988
Cox, Geof, Ready Aim Fire Problem Solving, Oak Tree Press, Dublin, 2000
De Bono, Edward, Six Thinking Hats, Penguin, London, 1985
Peters, Tom, Thriving on Chaos, Macmillan, London, 1988
Peters, Tom, Liberation Management, Macmillan, London, 1992
Semler, Ricardo, Maverick! The success story behind the world's most unusual workplace, Arrow Books, London, 1994
Drucker, Peter E., `The discipline of innovation', Harvard Business Review, May-June 1985, pp 67-72
Dumaine, Brian, `The bureaucracy busters', Fortune, June 17, 1991, pp 26-36
Farnham, Alan, `How to nurture creative sparks', Fortune, January 10, 1994, pp 52-56
Schlender, Brenton R., `How Sony keeps the magic going', Fortune, February 24, 1992, pp 22-27
Stewart, Thomas A., `GE keeps those ideas coming', Fortune, August 12, 1991, pp 19-25
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