Innovative power through dynamic capabilities and a culture of trust
// by Matthias Rensing
Organizational Development, People & Culture
In newer innovation research, a fundamental paradigm shift can be observed, from pure basic research to a resource recombination. In the future, so the thesis of the newer innovation research, the innovation process will no longer be controlled by radical break-throughs but rather mostly by the synthetisation, linking and intersection of already existing insights and experiences.
In this, important keywords are „open innovation" and „inter-organisational innovation networks". Open innovation describes the opening up of the innovation process both through the integration of external partners such as customers, suppliers, research institutions, etc., but also through the early commercialisation of ideas and technologies. But also of importance are increasingly inter-organisational innovation networks which are characterised by cross-company cooperation for the promotion of the linking of different areas of knowledge (cross innovation), with the objective of increasing one‘s own innovation potential.
The cross-departmental and cross-company cooperation is being focussed on more since innovation happens predominantly across departmental and even company boundaries.
The transfer of the theory into lived business practice, however, requires changed framework conditions in day-to-day business. Therefore, the question arises with which approaches companies can be controlled confidently so that innovation can be lived actively and convincingly and commensurate successes are ensured.
Two points of view enable access to these changed framework conditions: dynamic capabilities and a trust-based business culture. While dynamic capabilities describe the organisational capabilities required for the development of innovations, the second pillar, the business culture, reflects the general willingness to innovate and thereby constitutes its prerequisite.
Dynamic capabilities describe the capabilities of a company to quickly and dynamically adapt to an constantly changing market environment. The assumption behind this is that relevant influencing factors for innovation success are no longer to be found solely on the personnel level. It is no longer solely about finding a „Steve Jobs" in order to carry innovation into the company. Rather, it is to find the capability for a corresponding ability to link also on the organisational level.
Very specifically, the dynamic capabilities can be broken down into the following four capabilities:
The sensing capacity describes the capability to recognise early on new customer needs, relevant technological developments, activities of the competition as well as promising market trends, in order to identify options arising therefrom in the market environment in a timely manner.
- With learning capacity, new knowledge is acquired externally, incorporated, and thereby company-internal new knowledge is generated. This way, a broad and comprehensive knowledge base is provided and it is equally ensured that it is constantly updated and developed further.
Integrating capacity brings the different knowledge building blocks together in a new form and fashion, establishes creative links, and promotes intelligent combinations of existing knowledge. This way, the development of new, innovative products and services or areas of business is driven forward.
The coordinating capacity, last but not least, ensures that the company-internal resources corresponding to the newly found innovation ideas are provided and that the tasks are assigned and coordinated.
While the sensing capacity and learning capacity contribute towards company-internal establishing and expanding the raw material for innovation and thereby building the company-internal value generation potential, the integrating capacity and coordinating capacity ensure that it can also be exploited by the company.
Companies that feature a balanced mix of these four dynamic capabilities are long-term more sustainable and innovative than other companies. This is also confirmed by empirical research results.
In the Anglo-American area, dynamic capabilities have been discussed comprehensively for more than a decade. By now, this approach has also arrived in Germany and first management approaches about how dynamic capabilities can be targetedly implemented at Companies are being discussed.
Trust-based business culture
Second to the dynamic capabilities, the second pillar for strengthening the innovation power at companies is a trust-based business culture. The Great Place to Work® concept offers an excellent approach for this.
The first dimension of the Great Place to Work® method is the measurement of the individual experience of the business culture of all employees, the so-called „trust index". For this, the Great Place to Work® Institute conducts anonymous employee surveys in the form of approx. 60 questions regarding the topics of „believability of management", „respect of the management towards employees", „fairness to all employees", „team spirit of the employees amongst each other", and „pride of the employees in the company". Those asked have the opportunity to communicate in a protected fashion their approval or rejection of theses such as „my boss is competent" or „I would recommend to my best friend to work here".
For the second dimension, the so-called „culture audit", employees of the Great Place to Work® Institute analyse the structures, processes and tools of the human resources management.
For this, companies must explain and prove their respective measures in nine areas.
How are new employees acquired and integrated?
How does management inspire the employees and how does it communicate the company‘s objectives and values?
How does comprehensive and believable information take place?
How does management listen to the ideas, wishes and complaints of the employees?
How does management display valuation/appreciation towards the employees?
How are individual and comprehensive employee development concepts created?
How does the company display care for its employees?
How are extraordinary events celebrated?
How are the fruits of success shared?
Both dimensions are thereafter consolidated into an overall assessment and a report. The assessments indicate, among other things, which processes and structures of personnel management contribute significantly to the culture of trust experience by the employees and where there are still significant opportunities for improvement. Furthermore, appropriate „best practices" are provided as well that serve as inspiration for the further development of the culture of trust.
Long-term studies of the Great Place to Work® Institute have proven that companies with a distinctly pronounced culture of trust feature particular strong innovation power. A culture of trust is a good prerequisite for employees to time and again want to re-invent „their" company fearlessly and bravely, and this in close and trusting cooperation with their managers/executives.
From theory to lived practice
The IT consulting company noventum consulting, whose founding dates back to the year 1996, is living proof of the attitudes and principles presented here. Its multiple prize awards as favourite employer in the Great Place to Work® ranking are known and are time and again quoted as best practice. The systematic dealing with a culture of innovation and business development in customer workshops and countless customer projects documents the practical implementability of the ideas explained here.
The managing director of noventum, Uwe Rotermund, brings the core issue of his consulting activity in term of business culture to a point as follows: „Employer attractiveness is decisively characterised by a trust-based business culture. It is of particular importance to us to support companies on their path towards a future-oriented business culture. In this, we take after the tried and tested principles of the Great Place to Work® Institute, for which we are acting as an „ambassador". Any substantial change of the business culture is a process that requires openness, commitment and courage. We would like to accompany you in this and make our experience available to you. With our „Corporate Culture Concepts", we have created different methods of approach to this important topic.
noventum consulting GmbH