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it. There is a significant difference be- processes that humans use to produce
tween the generation of the idea (crea- new and novel ideas (e.g., [39, 57]).
tivity) and its introductioninto practice. Psychologistshave studied the processof
The innovation of a new product occurs change in people in such areas as influ-
whenthe productis conceived,produced, ence and persuasion (e.g., [22]). These
andused. The innovationof a production studies have investigated variables such
processis complete only after it is in op- as messagesource,appealof the message,
eration. The innovation of an organiza- and the personalityof the personreceiv-
tionalstructureis accomplishedwhen the ing the message to determinethe impact
system has been set up and made opera- of a given message on an individual'sat-
tional. titudes and behavior. Research spurred
When we use the phrase "new to the by Lewin [28] has led to the analysis of
organizationand to the relevant environ- the forces within a given individual that
ment,"we are not limiting an innovation produce change. From Lewin's work
to the first known use by mankindbut to evolved investigationsin groupdynamics
the referencegroups of the potential in- describingthe functioningof groups and
novator. Introducing simple hand tools how they help shape and changethe atti-
into agriculturaluse in a primitive cul- tudes and behavior of an individual [6].
ture representsan innovation,just as the Further work in this direction has pro-
first use of a complex biochemicaltech- vided the applied behavioral scientist
nique or elaborate mechanical farming with a frameworkwhich he can use to
machineryin the United States is an in- create change. The objective of Bennis,
novation. Benne, and Chin [2, p. 3] was "the appli-
In this paper the processof innovation cation of systematic and appropriate
is consideredas a specialcase of the proc- knowledgeto human affairsfor the pur-
ess of changein an organization.The two pose of creating intelligent action and
differonly in the novelty of the outcome. change."
Sincethere are no data either to support
C. ECONOMISTS AND INNOVATION
or refute this statement, "change" and
"innovation" will be used interchange- Economists have been the social sci-
ably in this paper. Hopefully, the follow- entists who have carriedout the most di-
ing analysis will be more general than a rect studies of innovation.However,they
discussion of innovation alone and will have focused on the implications of in-
also apply to change that people would troducingnew developmentsratherthan
normallynot considerinnovations. on the process itself. Economists have
presentedhypotheses as to the impact of
B. PSYCHOLOGISTSAND INNOVATION research and development on economic
Psychologists have emphasized two growth (e.g., [1, 9, 19, 38, 51]). They
relevant aspects of innovation-creativ- have investigated the role of govern-
ity and change in individuals' behavior ment's support of researchand develop-
and beliefs. One major area of research ment (e.g., [38]) and the spillover into
on creativity has been the determination civilian endeavorsthat results from gov-
and measurementof different aspects of ernment research and development ex-
creativity in individuals (e.g., [21]). An- penditures for defense efforts (e.g., [52,
othermajorobjective of researchon crea- 56]). Economists with the assistance of
tivity has been to understandthe thought psychologists have investigated the
occurs. Instead they have been forced to tine activity he is not likely to involve
base their beliefs on investigations of the himself in creative problem-solving.He
attributes of a creative individual (e.g., is not likely to question his existing be-
the way he spends his time and his per- havior and, therefore, is unlikely to be
sonality), the qualities of a creative solu- creative. This indicatesthat an organiza-
tion, and factors in the environment that tion which keeps employeesimmersedin
foster creativity. very routineactivities is not likely to be a
very creative one.
A. CHARACTERISTICSOF CREATIVE
INDIVIDUALS
Social psychologists have pointed out
the great influencewhich groups have in
Existing research leads us to the fol- the determination of the goals, beliefs,
lowing conclusions about the creative and behaviorof their members.The indi-
problem-solving process ' vidual seeks the supportof the groupand
1. Creative problem-solving appears to be a in return abides by the norms of the
high-risk activity, that is, often erratic and group. Extrapolating from this, we can
unpredictable. hypothesize that groups could have a
2. Creative people appear to have a detached
devotion to their work; they have a deep strong norm that either supports or dis-
commitment to the problem they are trying courages creativity and innovation. We
to solve, yet they are not so deeply immersed would hypothesize that organizations
that they are unable to see the problem in a which reward people for creative ideas,
broader perspective. allow freedomto select and pursueprob-
3. Creative people are receptive to all kinds of
ideas. They will consider them and judge lems, provide open communicationchan-
them on their merits. nels, and encouragedifferentand unusual
4. Creative people rely on free exploration in points of view would both attract and
that they actively go out and search for new develop more creative people. We know
alternatives, advice, ideas, and opinions from that many organizations have tried to
a wide variety of sources.
5. Creative individuals appear to commit them- foster an atmospheresimilar to the one
selves to a specific solution to their problems just outlined by setting up special
later than their less creative counterparts. "think" groups through brainstorming
6. Creative people tend to be non-conformists or Synectics sessions.
and question authority and existing problem
solutions. While there has not been extensive re-
searchon characteristicsof organizations
B. CHARACTERISTICSOF ORGANIZATIONS that foster creativity, we can conclude
THAT FOSTER CREATIVITY
that this is an importantarea for further
The environment in which the individ- research.2
ual participates has an important influ-
ence on his creativity. As one illustration III. INNOVATION
of the importance of the organizational The creative idea and its development
environment, consider "Gresham's Law" represents the seed germinated by the
of planning-routine drives out plan- innovator. To develop a clear picture of
ning-which implies that when a person the processby which new ideas are intro-
is deeply involved in a very highly rou-
duced into an organization,we must pro-
1 There are many recent studies that have at- vide a way of classifyingthe innovations.
tempted to summarize our knowledge of creativity.
Detailed descriptions of our beliefs about creativity 2 Steiner [54] gives the most extensive discussion
can be found in [20, 42, 53, 54, and 55]. of this topic.
For some people innovation is an as- Now considerinnovations that are in-
signed task. We will classify this type of fluenced by the success or the lack of
change as programed innovation, since success of the organization.For matters
these changesare clearly specifiedby the of simplicity,and becauseof our inability
organization. There may be creative to distinguish accurately between de-
problem-solving in the creation of the grees of success or failure, we will divide
idea, but once it occurs the organization our non-programedinnovation into only
has well-definedroutines and procedures two categories.First, slack situations are
for evaluating and implementing the those in which the organizationperceives
idea. Style changes are the types of itself as successful. Cyert and March [7]
changes that we usually see in the cate- hypothesized that success produces ex-
gory of programed innovation. Minor cess resourceswhich the firm can decide
modificationsin the product and minor to use in a variety of ways-slack. Sec-
extentions of the product line are other ond, in the distress condition the organi-
developments that usually occur rou- zation perceivesitself as being unsuccess-
tinely. Many American industries-au- ful.
tomotive, home appliance, soft goods, 1. Slack innovation.-Slack conditions
and most other consumergoods-can be occur when the organization is rather
classified as style merchandisers,where contented with itself. Under these situa-
the structure,elements,and performance tions we expect to find wide searchon the
characteristicsof products change little part of the organization for new ideas.
over the years but the style, colors, and The search carried on by the organiza-
minor decorative options change quite tion will be externalto the organization's
drastically from one year to another. structure and people. The search will be
These style changes are necessary if the supplementary-research and develop-
organizationis to continue to thrive and ment laboratorieslooking for new prod-
produceproducts that are demandedby ucts, new processes,a new group to add
the public. Style innovations occur in to the organization.As another example,
most of these organizationsas a routine the norm for education in our society
procedure.The firmhas a subunit to cre- implies that in a slack condition we can
ate or gather new design ideas. The de- expect an organizationto emphasizeedu-
cation for its employees to provide them instead, the company will emphasize
with new knowledgeand skills. cost-reduction projects. The company
One major hypothesis we are making will often fire the president, reshuffle
is that the intent of the people within the people, and apply great pressure to cut
organizationin a slack situation is to try costs in an effort to become successful
not to disturb the internal structureand again.
operation of the organization. The or- Under conditions of mild distress we
ganization in the slack condition spends hypothesize that the organization be-
heavily on researchand developmentac- haves logically. That is, the organization
tivities to keep on top of the new knowl- adopts moderate rather than extreme
edge in its world in orderto get a signifi- steps or great alterations.If these do not
cant head start on its competition in 'the work, the company moves to great dis-
area of new products and processesthat tress wherewe expect more radicalmeas-
will keep the company successful in the ures and random search. These more
future. The organizationin a slack condi- radicalmoves are seen as being necessary
tion obtains a new group or additional and functional as-the company finds it-
educationfor severalemployeesin opera- self seriously threatened and in greater
tions research, behavioral science, or need to find a significant performance
marketingresearch.While applyingtheir improvementto save itself. We hypothe-
skills and knowledge, these people often size that a companyin great distresswill
bring about innovations in the organiza- behave less predictably than organiza-
tional structure and people although tions under the other conditions we de-
these represent changes that the com- scribed.
pany had not planned on. Operations- Our hypotheses about slack and dis-
research groups interested in facilities- tress innovations representone explana-
scheduling and behavioral scientists in- tion of why Mansfield [33] and Knight
terested in management educat1ionand [24]found that the successfulfirmsmade
organizationaldesign have recently en- more radical and more frequent product
tered organizations under slack condi- and process innovations than the unsuc-
tions. After being given power and influ- cessful firms. Since most of the existing
ence in the organization,they have often data on innovation come from research
produced innovations in the organiza- on technologicalchanges,we can do little
tion's structure. more than-hypothesize about distress in-
2. Distress innovation.-The second novation. But distressinnovation is very
conditionthat we describedis that of the important, and although it is not as
unsuccessfulcorporation.A company in glamorousas new technologies,we badly
an unsuccessful position is likely to need data to test the hypotheses just
searchfor differenttypes of changesthan proposed.
it would in a slack situation. Knight et al.
C. GENERAL MODEL OF ORGANIZA-
[26] and Cyert and March [7] hypothe-
TIONAL SEARCH
sized that internal changes 'will occur
rather than changes in products or proc- We have briefly describedthree types
esses. The company does not have the of search. These three categories can be
excess resourcesto look outside. It can- combinedinto a general search model in
not affordthe risk and high cost of intro- which we predict the behavior of an or-
ducing a new product or process, and, ganization's search endeavors. For in-
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RADICALNESS,BY CATEGORY
OF INNOVATIONS
FORMAL
ORGAZATIONAL
Product or Production Organizational P
HIERARCHY People
Service Process Structure
(SELECTEDExA1WPLEs)
High Med. Low High Med. Low High Med. Low High Med. Low
Chiefexecutiveoffi-
cer X ........ X ..... .. X .X ..... ..X .....
Vice-president. X ..... ..... X ..... ..... ..... X X ..... .
Staff Division head. X ...X.......... ..... X ..... ..... X .....
person- I
nel at Plant manager. ..... .......... . .... X.. X X .
.....
several I
levels General supervisor. ..... ............... X .X ...... ..... . . . ..X... X
kForeman . . .| . X .. ..| X . | | | |.| X
to find few new ideas originating here. interaction between the levels of task
The few modificationsmade will be of activities is summarizedin Figure 3.
low radicalness. A few examplesof an individual'sposi-
The second level of decision-making tion in the formal decision-makinghier-
and task activity is aimed at changing archy and his power to innovate are
and improvingthe routine productionof shown in Table 2.
the people at the lowest level. Examples c) Creation of a new organization:
of individualsat this secondlevel are sci- This third techniqueis a subset of formal
entists working on the creation and de- organizationalpower but deserves spe-
velopment of new products, engineers cial consideration. Frequently we find
working on improving the production that in order to introduce an innovation
process, and market researchersevaluat- a new subunit or new organizationis de-
ing sales techniques. The tasks at this veloped, creating structural innovation
level have the people interact with the to introduce another innovation. This
new semiautonomousunit has both the and Heron [45] for the jet engine. To
desire and the power to innovate. Crea- date, this form of innovation seems to
tion of a new organizationalimage occurs have occurred most frequently for a
because the parent firm ignores a new product, service, or production process.
development. MacLaurin [30] pointed The new unit couldbe a completelysepa-
this out for the developmentof commer- rate firm or a subunit of the established
cial wireless transmission and Schlaifer organization.
Minor I ,
spontaneous - Purchasing- Manufacturing
- Sales - Accounting
innovations
FIG. 3
TABLE 2
POSITION IN THE FORMAL DECISION-MAKING HIERARCHY AND POWER To INNOVATE
FORMALFuNCTIONALPROBLEM- Pol
Product or Production Organizational
SOLVING HIERARCHY.reoe
(SELECTEDHiERAcEy Service Process Structure
(SELECTED ExA1{PLES)
High Med. Low High Med. Low High Med. Low High Med. Low
Slack innovation:
Organizational design ........... ......... ..... X .. ..... X ..... .....
Long-range planning ....... .......... X ..... .. X . ..... X ..... .....
Slack and routine innovation:
Research and development. X .......... .......... . ........... . X .. ..... X
Engineering .. ................ . X ..... ..... .....X . X . ..... X
Marketing................ ..... .X ...... . X . ..... ..... X .. ..... X
Operations researchers. .
....... X. X ..... ............. X .. ..... X
Minor spontaneous innova-
tions:
Purchasing........ ..... ....... X .......... X . .... ..... ..... ..... X
Manufacturing ........ ..... ..... X ...... .X ..... . X ..... X
Sales ........ ..... . X..... . . .... ..... ..... XX . ... X
Accounting . .
......... ...... .
............ ..... .......... ..... X .. ..... X