organizational change || social innovations in organizations

Social Innovations in OrganizationsAuthor(s): Knut HoltSource: International Studies of Management & Organization, Vol. 1, No. 3, OrganizationalChange (Fall, 1971), pp. 235-252Published by: M.E. Sharpe, Inc.Stable URL: http://www.jstor.org/stable/40396761 .

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SOCIAL INNOVATIONS IN ORGANIZATIONS*

Knut Holt (Norway)

Introduction

One of the vogue words these days is innovation. For some people it is even more - it is a value word that implies something good and positive. As with most popular words, it is mis- used and has different meanings for different people. It may therefore be appropriate to present some definitions in order to reduce the semantic aspects of the problem as much as possible .

The word innovation is used here in a broad sense covering the use of knowledge for creation and introduction of something new. In its widest sense the word encompasses discovery, in- vention, application, and diffusion. Whereas technological innovation is concerned with application of new technology, social innovation deals with application of new social patterns of human interaction.

Innovation is concerned with change. From a company point of view, a project can be classified as (1) a minor improvement;

*A paper presented at the Tenth Congress of the European Federation of Productivity Services, The Hague (Netherlands), June 8, 1971. This paper is reproduced with the permission of the author, who is a professor at the University of Trondheim (Norway) and at the Norwegian Institute of Technology.

235



236 Knut Holt (Norway)

(2) a radical improvement; (3) an adaptation; (4) a technical breakthrough; and (5) "blue -sky." The listing reflects increasing degrees of change and uncertainty. Except for (1) and perhaps (2), the others are usually considered innovations.

This paper is concerned with social innovations in organizations, which means finding new ways for cooperation between people who work and interact in organizations for common objectives. In most cases social innovations will be of the adaptive type. This requires a person or group that is aware of the needs of the organization, that keeps informed about research results and new developments in the field, and that can adapt them when appropriate. Such an approach does not exclude higher aims in terms of original thinking, research, and practical experiments with blue -sky projects that may lead to a breakthrough.

The present paper is divided into three parts. The first part establishes the needs for social innovations, whereas the sec- ond one deals with possible ways of satisfying these needs. The third part deals with the application of social innovations and the role of the industrial engineer in this context.

Innovations are concerned with the future. This imposes a limitation on the paper, as it is difficult to make predictions about developments in a complex field that is rapidly changing. Another limitation is the theoretical base for a study on innovations, which is rather vague. The paper will therefore be subjective as far as it is based on those many "theories" and empirical findings which the author from his own experience has found most appropriate .

The Need for Social Innovations

A number of reasons can be listed that all point toward the need for social innovations. They can broadly be grouped in two categories, stemming from managerial and social requirements.

1. Managerial requirements. In classical organization theory, the enterprise is considered a closed system in a stable



Social Innovations 237

environment. Most of its activities are programmed and its behavior is fairly predictable. Changes are slow and consist mainly of minor improvements in existing products and processes.

Now the situation has changed. The enterprise works more as an open system in constant interaction with a dynamic environment. Technology is changing at an increasing pace, in many industries the trend is toward greater complexity with a variety of new materials and products and more and more automation and computerization. The market is characterized by increasing competition, decreasing life-span of products, rapidly changing need patterns, and more variability and indi- viduality.

The new environment imposes new requirements on management. The organization is much more unpredictable in its behavior. It must respond quickly to changes; speed will be of great importance. Changes in materials, technologies, and need patterns require flexibility. Such a situation can be a threat, but offers opportunities for those who can utilize the creative potential of the organization. This is not easy to do. Creative talents are not located in one sector. All people are more or less creative and can make contributions if the organizational climate is favorable. It is therefore important to find ways and means of enlisting a positive participation from all the human resources within the organization.

The change adaptation requirements with regard to speed, flexibility, creativity, and participation add a new dimension to the function of management which results in, as Ansoff calls it, the bimodal firm. (1) In the past, effort has largely been concentrated upon the efficient utilization of resources for the manufacturing, marketing, and improvement of established products. In the future, an increasing share of time and resources will be devoted to innovations in new products and the exploita- tion of these in old and new markets (Figure 1).

The dual aspect of the managerial function creates special problems (Figure 2). The traditional type of organization based on clearly defined tasks has up to now proved to be satisfactory




Past Future

Unimodal Bimodal

Improvements Improvements Innovations

Figure 1. The bimodal firm of the future

in a stable environment. However, it does not satisfy the requirements with regard to innovation. It is a complicated but important task for management to design an organization that can control current activities and that at the same time has sufficient innovative capacity to anticipate and control changes. This is basically a human problem, as expressed by Honko, who stresses the importance of innovation and creative imag- ination. He sees a challenge that does not primarily concern products and services as such, but that is more a problem of new insights into human needs and their order of priority. (2)

The human aspects of the managerial requirements are emphasized by Bruyns, who claims that the method of management should be adapted to the needs of the employees. There has been a change in motivation from a work -extrinsic to a more task -intrinsic nature. This concerns all levels, but is of

Improvements Innovations

Defined tasks Speed Rigidity Flexibility Conformity Creativity Obedience Participation

Figure 2. Managerial requirements




Higher material standard of living Higher level of education More permissive home climate

Disrespect for established authorities Critical attitude toward society and

industry Greater awareness of social values

Figure 3. Societal changes

particular importance for professional employees, who are much more stimulated by the work itself than by the social conditions accompanying it. In order to carry out their work effectively, they must be free to create, to experiment, and to take risks without the usual social repercussions for failure. (3)

2. Social requirements. During the last years there have been a number of changes in society (Figure 3), which have im- plications for the enterprise in terms of new social requirements.

The growing standard of living has had a great impact. Whereas earlier the satisfaction of material needs such as food, clothing, etc. was the basic motivator, social and psycho- logical needs are now gaining rapidly in importance. Recogni- tion, autonomy, achievement, growth, and utilization of creative potentials are for many people the primary source of job satisfaction.

The need for a meaningful job and self -fulfillment has been strongly reinforced by a much higher level of education. In the USA, the 'Toiowledge industry, " which accounted for 25 percent of the gross national product in 1955, is estimated to reach 50 percent in the 1970s. About 50 percent of the youth go college, and 75 percent of the population in urban areas is expected to have a college education in 1980. Although lagging somewhat behind the USA, a similar trend can be observed in




other countries. The average educational experience of people entering the labor market in Norway was 7 years in 1930, 9 in 1950, and 11.5 in 1970. It is estimated to reach 14 in 1990. This is about the same as the present level in the USA. In Sweden, 18 percent of the sixteen -year -olds had upper secon- dary education in 1950, while 75 percent had it in 1968 and a figure of 85 percent is estimated in 1970. And it does not stop with the universities; they are now considered to be the starting point for a continuous lifelong education.

Forrester claims that a professional employee must spend 10 percent of his time keeping up with developments in his present field, and an extra 15 percent if he wants additional knowledge in order to move ahead. (4)

A more permissive home climate has led to an increasing disrespect for established authorities. This is felt not only in the home but also in the church, in the universities, and at work. The young generation no longer simply obey; they want to decide for themselves. They do not accept that their status and way of life are determined by their birth. There is also a much more critical attitude toward society in general and industry in particular. Many are beginning to question the present system, and wonder if it is not time for radical innovations in industrial thinking.

There is a greater awareness of social values. Whereas the problem earlier for many was to secure an existence, they now require a life. In the future they will seek a meaning. They question the value of work that yields only money; they require greater participation, more autonomy, self -development, and the opportunity to use their creative talents.

The capacity of an organization to adapt to a dynamic environment depends on its employees. Here is a great challenge to management. In order to meet the social requirements of the future, there is a real need for new ways of thinking. So- cial innovations may in the future be even more important than technological innovations. The ability to motivate others will be a criterion of managerial success. The manager must be aware of the needs of his associates and create an organizational




climate that allows for self -fulfillment by giving stimulation to independent thinking and creative engagement.

Some Alternatives

Management is faced with the challenging task of finding solutions that can satisfy both the managerial requirements im- posed by the innovation process and the social requirements of human needs. Unfortunately there exists no standard solution. New ways must be sought; here is an area in which creative thinking and practical experiments are needed in order to make progress.

Some ways that may be explored are indicated below. The solutions adopted will depend on factors such as the size and type of the organization, the degree and type of changes, and the education, experience, and motivation structure of the employees.

1. Development of a more organic management system. The traditional type of management system with a rigid structure and a rather autocratic type of leadership does not meet the requirements of a period of rapid changes and new social values. These are strong indications that a more organic system - as suggested by Burns and Stalker - with a rather loose structure and a participative type of leadership is part of the answer. (5) In such a system, authority is shared among those who are most qualified for the job. The communication lines are open for all, and there are good informal contacts within and between the groups. Initiative and creativity are stimulated, and independent thinking and action are valued. This should contribute to a flexible creative organization able to respond quickly to changes and at the same time able to satisfy important human needs. There are, however, human problems in developing a more organic system. Burns and Stalker have found that there are forces within the organization pulling toward formalization. This is partly due to the political and status system. It also appears to result from a number of employees who prefer programmed activities and the stability and security




that is characteristic of the mechanistic system. (6) The design of the management system should take into con-

sideration that various departments operate under different conditions with regard to task and type of personnel. A certain differentiation is therefore needed, as discovered by Lorsch (7) and verified by other studies. (8) Innovative departments with professional workers and unpredictable activities need a rather organic system that allows the various groups to be flexible and discretionary in their forms of organization. On the other hand, it appears that a mechanistic system has been efficient within manufacturing departments mostly operating under rela- tively stable conditions.

2. Use of the project organization. Innovative projects are of an interdisciplinary nature and require the cooperation of people with various skills. Often it is practical to supple- ment the conventional organization with temporary, problem- oriented project groups. A number of departments and levels may be represented in the groups that come together to accom- plish common, well-defined and accepted objectives and then disperse. This development is stressed by Bennis, who claims that the future will require adaptive, rapidly changing systems arranged on an organic rather than a mechanistic model. The executive will become more of a coordinator or 'linking pin" between the groups. (9)

If there are only one or a few large projects going on at the same time, independent groups may be the best solution. If there are many projects, a matrix type of organization cutting across divisional lines with full-time and part-time members may be the answer. A special problem is the location. A flexible and creative environment can be made by grouping the participants together. This will, however, reduce the possibility for support from their specialist colleagues in the functional departments. Allan has studied this problem and concludes by suggesting that participants in brief projects should be located together, whereas participants in long projects should remain in the functional departments. (10)

The project leaders may encounter difficult human problems




both in their relations with the heads of the functional departments, with whom they are competing for staff and support, and with the group members who are temporarily put under their direction. A frustrating situation often occurs when the organization is restructured after the completion of a project. A special problem is caused by a tendency toward formalization as time passes. Hunt claims that the groups, if left to themselves, will evolve into whatever type of bureaucracy provides most security. Therefore, a definite effort is required from top management in order to prevent a formalization that could de- stroy the flexibility the group needs to meet the changing requirements of the problem they have to solve. (11)

3. Concentration of innovative functions. Innovative activities such as research, development, manufacturing engineering (ME), industrial engineering (IE), systems analysis (SA), operations research (OR), etc. are in most companies more or less fragmented and sequential throughout the organization (Figure 4) . This solution has proved to be satisfactory under stable conditions, but does not meet the present requirements.

One radical alternative is a centralization of all innovative functions to be performed simultaneously. A number of argu- ments in favor of such a solution can be listed. The planning of new technology requires a systems-oriented approach with the coordinated and simultaneous effort of a number of specialists. A concentration that is both administrative and phys- ical will yield a strong and influential innovative organization able to respond quickly and efficiently to changes. It offers in- teresting positions with status and salaries of such a nature that they should attract talented men. Such an organization can have an organic structure and be a great stimulus to creative activity by providing a climate where informal interaction and the free exchange of ideas are facilitated. A concentration of innovative activities will break down departmental barriers and reduce friction and conflicts. (12)

A number of companies have moved in the direction indicated. However, complete centralization is an extreme that has yet to be seen in practice. In larger companies it may be necessary




FRAGMENTED - SEQUENTIAL

I ME IE EDP SA OR _O_

H ME - IE EDP SA - OR O

in Innovative groups centralized

CONCENTRATED - SIMULTANEOUS

Figure 4. Degree of centralization of innovative function

Notes: Under alternative I innovative functions are completely fragmented, while in HI they are completely concentrated within one unit or department. Alternative n represents an intermediate position. ME = Manufacturing Engineering; IE = Industrial Engineering; EDP = Electronic Data Process- ing; SA = Systems Analysis; OR = Operations Research; O = Other Innovative Functions.

with a differentiation according to level. At the top may be a corporate development group responsible for environmental forecasting, strategic planning, corporate research and information, and service to divisions; at the divisional level may be groups concerned with divisional research and development, and with planning, information, and services to plants; at the plant level may be groups occupied with improvements and the introduction of products, processes, and systems.

The importance of top-level planning is pointed out by Jantsch. He claims that current administrative and operative structures do not have the flexibility required, and that there must be an organizational split between operations and innovations .




Top management and the board of directors should take an active part in the policy planning and should formulate the objectives of the organization in light of the anticipated social context. (13)

A certain concentration of innovative activities should to some extent meet the managerial requirements. However, there is a danger of creating a Tlbrain trust" to do the thinking while the rest of the organization has to conform to the systems developed. Such a solution does not satisfy the social requirements. A major task of the innovative group would be to ensure that other members of the organization are stimulated to think and to use their creative talents. This point is stressed by Jantsch in connection with the corporate development group. He claims that the translation process between objectives and opportunities must be running both upward and downward. This will create self -motivation at all levels and elicit creative ideas as part of the forecasting and planning process. (14)

4. Employee participation. Participation is a key word in connection with the satisfaction of social needs. K the work is organized in such a way that the employees are stimulated to self -coordination, self-control, and the utilization of their talents, the managerial requirements with regard to speed, flexibility, and creativity should also to some extent be met. Par- ticipation can take many forms. It can be direct or indirect; it can be concerned with the formulation of objectives, with the search for alternatives, or with decisions regarding solutions.

Horizontal job enlargement is a form of direct participation in which operators are given a broader area of responsibility and greater variation through the combination of different tasks or by being taught to do various jobs. In this way they can have a certain influence on the details of working methods.

Vertical job enlargement allows for a higher degree of participation. The operators are given tasks that are usually carried out by specialists or people higher up in the hierarchy - for example, methods planning, work distribution, maintenance, and quality control. This will give possibilities for variation, social contacts, responsibility, personal development, and




creative behavior. One alternative is autonomous work groups. The groups de-

cide on the working method themselves and distribute the work among the members. In planning the activities of the groups, one has to take into consideration both the technological and human requirements, their characteristics and interdependence. Thorsrud lists as a human requirement related to job design the need for the content of a job to be reasonably demanding in terms other than sheer endurance and yet to provide a mini- mum of variety, the need for being able to learn on the job and to go on learning, the need for some minimal area of decision- making that the individual can call his own, the need for some minimal degree of social support and recognition in the work- place, the need for the individual to be able to relate what he does and what he produces to his social life, and the need to feel that his job leads to some sort of desirable future. (15)

The solution arrived at will depend on the situation. In most cases a payment system based on a fixed wage plus bonus and a program for operator training will be included. Gispen and Van der Graf stress the importance of mutual trust and under- standing, the willingness to experiment, and the need for support from all management levels. Above all, patience is needed, as real participation is a long-term activity. It requires faith in the possibility of developing an organization that is better adapted to the present social, technical, and economic realities. (16)

Automation and the increasing complexity of manufacturing operations may in many plants limit the possibilities of active participation on the shop floor by autonomous work groups. It may therefore be necessary to search for other solutions. One approach that might be considered is permanent or ad hoc task forces comprising operators, staff specialists, and line super- visors. They work together on problems regarding the section or department concerned. McDavid reports good results with teams composed of part-time or full-time members from different disciplines and levels. Each team has three to five members and deals with a specific problem. The decision to




implement a proposed solution rests with the manager concerned. A number of teams may work at one time. One enterprise has 22 teams representing all plants and departments. A full-time coordinator acts as a catalyst, attending meetings and arranging for help from specialists as required by the teams. (17)

Another form of direct participation is work simplification. The purpose is to stimulate the employees to creative thinking in connection with the work they are doing, supervising, and have firsthand knowledge about. Such a program includes training in method-study and a follow-up procedure whereby the employees are stimulated to participate in the improvements of products, processes, and methods. A well-designed suggestion- system is an important part of the program.

Indirect participation is based on elected representatives from the employees in bodies such as the board of the company, productivity councils, safety groups, etc. This approach does not involve each individual directly, but may be useful for problem areas that are too big for the active participation of all concerned. If operated in the right way, it should to some extent satisfy managerial requirements by bringing forth creative ideas and facilitating implementation of changes.

Of particular interest is representation on the board of directors. This is not a question only concerned with the utilization of experience and creative abilities; it is also a political matter of power distribution. In a number of countries there is a trend in this direction. Some claim that this development should be promoted by legal means, whereas others prefer a more careful approach through experiments. There are also those who think that board representation should not be a political matter. The function of the board is so important that the members should be selected on the basis of their personal competence, but such various interests as owners, employees, etc. may be represented in a higher body that elects the board.

5. Combinations, in actual practice the solution will probably be a combination of various alternatives. One approach along this line is indicated in Figure 5. Here an organization with




Q-O Decision teams '_ O

I I I I oil '

* -1 President t

ò "I I ' n

n i s s - * J

I _ J - OOOO jProject groups L - qO

Figure 5. Organization of innovative and operative functions

operational and innovative parts is shown. Whereas the operational part, which is largely concerned with the marketing, manufacturing, and improving of existing products, may have a rather mechanical structure, the innovative organization should have a loose informal structure that is flexible, creative , and able to respond quickly to changes in the environment.

Major projects should be handled by temporary project teams of an interdisciplinary nature comprising members from both the innovative and the operative parts. The compo- sition of the groups is based on individual competence - here is an opportunity for experienced or creative workers to participate. On projects where a number of decisions have to be taken as the work is progressing, it may be useful to have special decision teams.




Application

Well-established needs, possible alternatives, and even good solutions are not enough to get results. In many cases the most difficult part of the innovation process is the actual application, the adaptation of research results and new ideas to the situation of the particular company. Here lies a serious problem, as most companies are not organized for innovations.

One indication of this is the slow rate of adaptation. De Jong has demonstrated this for the application of industrial engineering techniques with data from the USA, where it takes decades before the saturation point is reached. He believes that the situation is similar and perhaps even more alarming in Europe. (18)

There is no reason to think that the application of social innovations is in better shape. However, the situation is rather paradoxical. In order to get social innovations, the company may first have to make a social innovation. It must develop an organization that is able to cope effectively with change - an organization that satisfies both the managerial requirements with regard to speed, flexibility, and creativity and the human requirements with regard to spiritual needs. Here the circle starts again. The alternatives will not be repeated once more. It should, however, be stressed that innovative action cannot be expected from organization members heavily loaded with current activities. There must be a person or group who can take care of the innovative activities.

In this context it may be appropriate to mention the role of industrial engineering. Up to now, industrial engineering departments have been concerned largely with the improvement of manufacturing operations; in some companies they have also covered clerical operations. The modern industrial engineer should, however, have an important role to play in connection with technological and social innovations. With his broad back- ground in the natural and social sciences he could be a creative




element and contribute ideas and alternatives. He should be particularly well qualified as a coordinator of the work of the many people with different backgrounds that take part in most projects. His most important contribution may, however, be as a stimulator by enlisting active participation from all members of the organization in order to utilize their creative talents as far as possible. (W)

The human aspect of the job of the industrial engineer is emphasized by De Jong; his effort must be directed both at the creation of effective systems for production and innovation and at the provision of meaningful work in accordance with the ca- pacities and needs of the employees. He claims that these objectives, which he calls the well-being of the company and the well-being of the employees, should be regarded as equiva- lent. (20)

li the industrial engineer is able to live up to the expectations indicated above, he may be the nucleus of one of the most important tasks facing industry today - the development of an organization that is able to handle both the technological and social innovations needed in a rapidly changing society.

Conclusion

The German philosopher Friedrich Nietzsche claimed that human beings are pulled in two opposite directions. The ratio- nal impulses are represented by the sun god Apollo, who stands for harmony, reason, judgment, and order; the risk of following them is over-organization. The irrational impulses are represented by the wine god Dionysus, who stands for inspiration, feelings, vitality, and creativity; but the risk here is destruction.

The same forces appear to exist within organizations. There is a conflict between the present and the future, between current operations and innovations, between order and creativity. Neither extreme will give the solution. The problem is to develop an organization that has a certain order and discipline, but that at the same time is quick, flexible, and stimulates participation and creative behavior.




There is no standard solution available; here is an area where there is room for creative thinking and practical experiments. In a world where almost everything else is changing, there is no reason to believe that the old managerial systems can continue as if nothing had happened.

Technological innovations are based on a solid body of know- how. The time has now come when a similar body is needed for social innovations. But there is a long way to go, and we do not see the final answer. However, there appear to be some alternatives that should be further explored. A more organic management system, temporary project groups, a certain centralization of innovative activities, and employee participation are all means that to some extent and under certain conditions are able to meet managerial and social requirements. As long as these requirements are pulling in the same direction the problem may not be too complicated. As long as efficiency and humanism go together the matter is basically a question of knowledge. The real problem emerges when they are pulling in different directions; then it is no longer a practical problem only of Ttknow-how," but first of all an ethical question concerned with Ttknow-why."

Notes

1) H.I. Ansoff, "The Innovative Firm," Long -Range Plan- ning (December 1968), pp. 26-27.

2) Jaakko Honko, "The Challenges of the 1970s to Manage- ment," The Finnish Journal of Business Economics (1970, No. 2).

3) R. A. C. Bruyns, TWork and Work Motivation in an Auto- mated Industrial Production Process," Management Interna- tional Review, X, 4/5 (1970), pp. 49-60.

4) J. W. Forrester, TtDer Ingenieur im Jahre 2000," in Fortschrittliche Betriebsführung, Band 22, Kurt -Hegner -

Institut für Arbeitswissenschaft des Verbandes für Arbeits- studien (Berlin, Köln, Frankfurt-am-Main: Beuth -Vertrieb GMBH),p. 157.




5) Tom Burns and G. M. Stalker, The Management of Innova- tion (London: Tavistock Publications, 1961), p. 269.

6) Ibid. 7) Jay William Lorsch, Product Innovation and Organization

(New York: Macmillan; London: Collier -Macmillan; 1965), p. 184.

8) Knut Holt, "Management of Technological Innovation," Management International Review, X, 4/5 (1970), pp. 21-37.

9) Warren G. Bennis, Kenneth D. Benne, and Robert Chin, The Planning of Change (London: Holt, Rinehart & Winston, 1970), p. 627. 10) Thomas J. Allan, "Communication Networks in R&D

Laboratories," R&D Management (1970, No. 1), pp. 14-21. 11) Raymond G. Hunt, "Technology and Organization,"

Journal of Academy of Management, XIII (September 1970), pp. 235-252. 12) Knut Holt, "Industrial Engineering Organization and Prac-

tices," The Journal of Industrial Engineering, XIX (August 1968), pp. 386-390. 13) Erich Jantsch, rTNew Organizational Forms for Fore-

casting," Technological Forecasting (1969, No. 1), pp. 151-161. 14) Ibid. 15) Einar Thorsrud, Participation - Industrial Democracy,"

a paper presented at the 17th IUC Annual Conference, Bergen, Norwav, 1970. 16) M. H. K. van der Graf and J. H. Gispen, "Work Struc-

turing," Progress, 54 (4, 1970), pp. 116-121. 17) I. S. McDavid, People, Participation and Motivation

(London, 1970), p. 18. 18) John R. de Jong, "Researches in Industrial Engineering

Both Here and Abroad," a manuscript for a forthcoming book edited by Brian Moores. 19) Knut Holt, op. cit. 20) Ibid.



organizational change || social innovations in organizations

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