Review: Handbook of Organizational and Managerial Innovation

Handbook of Organizational and Managerial Innovation (Elgar Original Reference) edited by Tyrone S. Pitsis, Ace Simpson, and Erland Dehlin.

Innovation is never free of its social context, its resistors, enablers, recalcitrants, champions and the like. Indeed, innovation can be thought of as the very stuff of social relations, as in the case of Hannah Arendt’s (1958) idea of innovation being integral to democracy and vice versa. Wherever there is an absence of democracy, Arendt argued, there is also the decline of innovation.

The editors of this volume remind us that innovation is an essential part of organizational life and is not restricted to technology. Innovation is a function of human relations and context.
To my knowledge, the Handbook is unique in the breadth and depth of offering a diversity of ideas and inspiration for studying organizational and managerial innovation (OMI).

Chapters in Part I view innovation as technique, instituted by managers in a relatively stable environment. Those in Part II view innovation as an ongoing process that can be recognized and harnessed, not as a managerial technique but as a process of learning and becoming. Part III presents case studies.

OMI systems like Toyota’s lean production system, ‘six sigma’ at General Electric and brand management at Procter & Gamble provide some firms with lasting performance gains, as well as contributing to economic and societal progress. Thus, results should be of interest to managers, boards, and shareowners, as well as society at large. Researchers found that product innovations new to market and process innovations new to the industry, not those just new to the firm, produce not only profits (private rents) but also public gains through multiplier effects. Takeaway: Measure stakeholder satisfaction and social progress, not just firm performance.

Learning and embedding innovative routines is paramount in a changing environment, as is continuous evaluation and reconfiguration. Stability provides opportunity for entrepreneurs with a fresh perspective. Takeaway: Open environments with diverse knowledge sources have the upper hand.

How do we compete against low-cost labor from the developing world? “In knowledge-based societies, the core ingredients of competition take new forms: instead of a focus on efficiency and production only, innovation and creativity have become the strategic cornerstones of the successful modern organization.” Takeaway: Rhythmic patters of intense concentration and loose detachment facilitate high employee engagement. “There needs to be a balance between ‘edging’ and ‘retreating’ instances on the one hand, and supportive physical, socio-emotional and personal spaces on the other.”

The aim of accounting controls has traditionally been to ensure conformity to plans and targets and this requires elimination of deviations, and protection from unexpected events or disturbances.

Boedker and Runnall term this predominate view as ostensive and contrast it with “performative” accounting, which informs debates that challenge assumptions. Controls can be overridden, depending on their usefulness when deemed no longer appropriate. Innovation is not always an orderly process. Takeaway: “Unexpected movement and surprises in actor networks can be opportunities for knowledge creation.”

As the division of labour increases, this may lead to more innovation (of certain types). But eventually, the further division of labour may be dysfunctional, and get in the way of innovation.

Incremental innovation stems from learning by doing, a well-developed division of labor and management initiatives to improve knowledge sharing. Radical innovation calls for flatter networks. Takeaway: “The right form will depend on the intended innovation.”

One chapter examines the development and use of self-managing teams at Royal DSM, a Dutch life sciences and material sciences company.  Transactional and transformational leadership played key roles in self-managed teams, as did ownership, communication, and trust. Takeaway: While competitors moved production to low-cost Asia, Royal DSM continues to produce in Europe while remaining competitive through self-managing teams.

Much more difficult to assess were chapters in Part II. Few organizations have been willing to embrace constant flux for the sake of innovation.  For example, innovative individuals are more frequently open to new experiences, motivated and proactive. However, they are also more likely to be “trouble-makers,” ready to challenge the status quo. Developing an organizational framework to facilitate innovation is difficult, especially for managers who fear loss of control. Even more difficult is being mindful of reification and attempting to avoid formalized practices.

The final chapter in this part explores the concept of “surprise.” We fear it. Yet, without it organizations would be boring and unable to adapt. The authors analyze the origins of the term, discuss the big and small, good and bad, planned and emergent. They outline useful typologies based on outward vs inward looking, defensive vs offensive; future vs past orientation and thinking vs acting. Researchers find that “organizations prepared to face the unexpected prefer a flexible, resilient mode, therefore loosening control, broadening information processing, using slack resources, to a mindful combination of rigidity and flexibility.”

Part III provided three interesting case studies.

I thought the science of organizational and managerial innovation was well developed but after reading Part II of this excellent handbook I can see we have barely scratched the surface. This volume is an excellent for reference for researchers, practitioners and students of corporate governance. I’ve reproduced the Table of Contents below, to give a more complete view of what is included.

Table of Contents