Innovation is hot. Books, courses and “management gurus” trumpet the
need to develop the creative potential of employees. Innovation is cast
as an essential ingredient for organizational survival in turbulent
environments. Innovative “learning organizations” are ones which
facilitate the generation of new ideas from the entrepreneurial energy
of their people. For those on the front-line, the challenge is how to
organize our people and systems so that we can generate and exploit new
ideas. The latest research from a team of scholars in the UK - Anand,
Gardner & Morris* - approaches this in a new way, leading to some
surprising results.
Organizing New Knowledge

Although a quick trawl of the Internet will provide you with a list
factors that are said to enable innovation – a flat, organic structure;
a high tolerance for experimentation; “idea champions” – the LBS and
Oxford researchers argue that these approaches concentrate only on
innovations that emerge out of existing work practices. The key issue,
they argue, is not how we make existing work more innovative, but how
we develop whole new structures to generate and exploit new forms of knowledge.

Elementary Knowledge?

By taking one of the most knowledge intensive industries in the
world, Management Consultancy, where the main asset is the expertise
and competence of staff, the researchers found that the following
elements were critical in the creation of new innovation structures.

· Socialized agency – Employees will create new
areas of expertise and innovation when it is a clear and obvious means
to progress in their careers. In the case of consultants they are
particularly motivated by their desire to become a Partner in the firm.

· Differentiated expertise – New areas of expertise
and innovation become possible when employees are confronted by novel
or divergent demands that require improvisation. In the management
consulting industry, this happens when consultants modify and extend
the recognizable tools and frameworks of their firm into distinctly
novel approaches.

· Defensible turf – Structural change for
innovation becomes possible when powerful stakeholders – inside or
outside of the organization – perceive the utility of a new approach
and provide a protected space. In the consulting industry, these spaces
often come from powerful clients who support the change, but in many
organizations it will come from senior managers who act as innovation
sponsors.

· Organizational support – New areas of expertise
and innovation become possible when the organization invests in their
development. For management consultants, Partners are needed to refer
long standing clients to the new knowledge area and also supply trained
personnel.

Pick ‘n’ Mix

Perhaps the most surprising and important insight of this research was the interaction of these four elements.

· “Socialized agency” is indispensable. Without ambitious and motivated individuals, new practice areas simply do not emerge.

· To kick start innovation, any of the other three elements can be used.

· But, maintaining innovation over time requires ALL
of the elements to become established. So, for example, a consultant
who becomes a specialist in Healthcare practices will only be able to
establish this as a separate area of knowledge within her firm when she
engages key stakeholders to reinforce the boundary around her work and
when she receives resources and support from within her organization.

For Management Consultants only?

The researchers don’t explore the implications for practitioners but
there are some obvious take-aways even if you aren’t an ambitious
management consultant looking for a career break.

1. If you are a change agent who wants to generate and establish new
ideas in your organization then understanding how structures could
serve to unleash more than one idea and be a powerful tool in
establishing a whole new approach to thinking within your organization.
This research emphasizes how structural change that facilitates
innovation does not initially have to be a top-down initiative, but
that it does require sponsorship and support from powerful stakeholders.

2. If you head up an organization the message is clear. New practice
areas depend on active individuals and can’t be manufactured – in other
words there is little point in simply adding divisions to your
organizational chart. You need to rethink the conditions that inspire
your employees to be innovative. Most critically, the view that safe,
failure-tolerated environments are beneficial may need to be revisited
– management consultants see the creation of a new practice area as a
means of either “going up or out”, becoming a Partner or leaving the
firm. A high stakes game that should encourage reflection on what
motivates innovation and whether a certain “edge” is essential in
generating the necessary energy.

* Anand, N., Gardner, H. & Morris, T. (2007). Knowledge‑based
innovation: Emergence and embedding of new practice areas in management
consulting, Academy of Management Journal, 50(2): 206-426.