Reference no: EM133613400

Cultural Bases of Innovation

When a company is operating in an uncertain, highly competitive environment, it is under pressure to be innovative. In such a situation, it is likely to develop a culture that rewards risk-taking. Peters and Waterman (1982:69) provided the following example:

Heinz's highly successful frozen foods subsidiary, Ore-Ida, is trying an intriguing variation . . . in order to encourage more learning and risk taking in its research activities. It has carefully defined what it calls the "perfect failure," and has arranged to shoot off a cannon in celebration every time one occurs. The perfect failure concept arises from simple recognition that all research and development is inherently risky, that the only way to succeed at all is through lots of tries, that management's primary objective should be to induce lots of tries, and that a good try that results in some learning is to be celebrated even when it fails. As a by-product, they legitimize and even create positive feelings around calling a quick halt to an obviously failing proposition, rather than letting it drag on with resulting higher cost in funds and eventual demoralization.

Innovative companies, such as Apple, place a high value on rapid exchange of ideas and information. This cannot easily occur in tall, hierarchical structures that insist upon formal lines of communication. The organizational structure is likely to be flatter, and the organizational culture will stress the values of informality and equality so that all members of the organization are encouraged to contribute to their full potential.

Such organizations develop what has been called a "networking style" of management. Intel Corporation was one example of a company that had avoided the bureaucratic hierarchy characteristic of most corporations. One of Intel's executives offers this explanation for the way the company had been structured: "What we've tried to do is to put people together in ways so that they make contributions to a wider range of decisions and do things that would be thwarted by a structured, line organization." Some of the features of Intel which contributed to a culture of informality and equality were the following:

Workers may have several bosses.
Functions such as purchasing and quality control are the responsibility of a committee or council, not a hierarchical staff reporting to an individual leader.
There are no offices, but only shoulder-high partitions separating work spaces.
Dress is informal.
All employees are expected to participate in discussions as equals, even though decisions are ultimately the responsibility of top managers.
Even the newest employee is encouraged to challenge superiors (Nesbitt, 1984:222).

The circumstances described above may have worked for Intel in the past. Would they be applicable everywhere? Why? Why not? Be specific.