Leadership and Organization in the Innovation Economy

Jon-Arild Johannessen

• Publisher: Emerald Publishing Limited
• Year: 2019
• Print ISBN: 9781789738582
• eBook ISBN: 9781789738599
• Topic: Business
• Subtopic: Knowledge Capital
• Index: Business

Since the 1980s, society has undergone enormous change. From an industrialized society, focused on efficiency and productivity, there has been a transformation to a globalized knowledge society that focuses on creativity and innovation. And yet, management styles have stayed the same, not adapting to this crucial change.  

Here, leading innovation expert Jon-Arild Johannessen offers a replacement to traditional goal-driven management and New Public Management (NPM). These old styles of management promote efficiency and productivity, but hamper creativity and innovation. To counteract this, Johannessen suggests and outlines a new concept: strategic innovation management. Through a thorough analysis and debate of the demands of the new leadership role, and the demands of both employees and organizations, Johannessen explores the place of this new management style in the 21st century. 

For students and researchers of knowledge management, leadership, or innovation, this is an unmissable book exploring a fascinating new proposal.

Chapter 1

The Future Role of Leaders

Learning Goals

• In this chapter you will learn how the new role of leaders can address creativity and innovation processes.
• The objective of the chapter is to foster understanding of the new role of leaders and to contribute to the replacement of goal-driven management.

Evaluation

The learning goals of the chapter are evaluated through student reflection tasks 1–8.

Introduction

In this book, we not only criticize new public management, we also propose an alternative to this way of thinking, such that leaders will possess specific management tools at a time when creativity and innovation are the most important parameters of success (Brynjolfsson & Saunders, 2013). This is a new way of thinking, or as Hlupic (2014) puts it, a leadership paradigm shift. Just as Hlupic focuses on a systemic approach to the problem, this book is structured along systemic lines.

There is a clear difference between having goals and managing with the help of goal-driven management techniques. Goals are motivating in many respects (Ackoff & Emery, 2007). Goal-driven management is not necessarily motivating, however (Brinkmann, 2016; Pedersen, 2015). Businesses must of course pay attention to their results, but there is not necessarily any link between good results and performance management (Rock & Jones, 2015). Like goal-driven management, performance management is oriented toward control, often right down to a micro-level (Hood & Dixon, 2015).

When people have a purpose for what they are doing, and thoroughly understand what this purpose is, then it is not always necessary to develop performance-tracking indicators to achieve a good result.

Should we develop goals and performance indicators for friendliness, generosity, helping others, sharing knowledge, curiosity, moral courage, enthusiasm, and the act of giving? Most people would answer “no” to this question (Brinkmann, 2016). Our point is, however, that all the qualities listed above give rise to creativity and innovation, according to empirical studies conducted by researchers including Grant (2014), Grant and Berry (2011), and Grant, Parker, and Collins (2009).

By counting what doesn't count, and not counting what really counts, a business loses opportunities it could have had by not counting to start with. In the global knowledge economy, what really counts is creativity and innovation (Rock & Jones, 2015). Therefore it is important that the new leaders motivate to make this happen.

Leaders often argue that they use goal-driven management to promote quality, efficiency, safety, and better results. A considerable body of research shows, however, that this is not the case (Grant, 2014; Grant et al., 2009; Grant & Berry, 2011). Performance management is also a concept that has been applied in parallel with goal-driven management. It is possible that goal-driven management and performance management have something to recommend then in the context of industrial enterprises that produce nails and concrete in a working culture of “heat and beat.” In a knowledge business, however, these management tools often work against their intended purpose because we do not know how to improve the creativity of knowledge workers (Wong, 2013). We do know, however, that knowledge workers are not motivated by performance-tracking systems (Drucker, 1999a, 1999b, 2007; Wong, 2013).

Goal-driven management has resulted in standardized working processes, even in contexts where working processes should not be standardized (Andersen & Tanggaard, 2016, p. 10). In many cases this leads to a lower-quality result because variation rather than standardization is the norm in interpersonal relations (Boyatzis, Murphy, & Wheeler, 2000; Post, 2006, p. 1–10).

There is an absence of empirical data concerning goal-driven management and performance management, so these approaches are based on assumptions, opinions, and the belief that people can be enticed with a carrot or chased with a whip (Hildebrandt, 2015).

Goal-driven management and performance management hinder, among other things, the application of context, situation, experiences, circumstances, expertise, tacit knowledge, implicit knowledge, and hidden knowledge, in a manner that is appropriate for the tasks at hand (Elmholdt, Birk, & Børgesen, 2015; Pflueger, 2015).

Most people endeavor to achieve whatever goals are being used to assess them. Goals are not necessarily used, however, to assess people at what they are good at and what they have a burning passion for. As a result, goal-driven management and performance management on the whole tend to result in mediocre performance (Wiedemann, 2016). If one is to encourage people to be successful, one must let them do what they are passionate about and what they are good at because that will foster commitment, creativity, and the ability to innovate (Duckworth, 2017; Grant, 2014).

There is an alternative to goal-driven management and performance management. We present the alternative in this book. Instead of a means/goal approach, we are proposing an objective/goal approach. The objective is what the business is designed to do. It is the objective, together with a burning desire to make a difference that really makes a difference, which is the overarching idea behind the new role of leaders in private and public-sector organizations.

This chapter attempts to answer the following question: How can the new role of leaders address creativity and innovation processes?

The subquestions that we investigate in order to answer this main question are the following:

Q1: How can strategic innovation management replace goal-driven management in relation to creativity and innovation?

Q2: How can we use moral courage to replace goal-driven management in relation to creativity and innovation?

Q3: A. How can helping other people promote innovation? B. How can givers promote innovation within businesses?

Q4: How can leaders use curiosity to replace goal-driven management in relation to creativity and innovation?

Fig. 1.1 summarizes the introduction and shows how the rest of the chapter is organized.

Fig. 1.1. The New Role of Leaders.

Strategic Innovation Management

The question we examine here is: How can strategic innovation management replace goal-driven management in relation to creativity and innovation?

Strategic innovation management is defined here as the science of effective organization with the aim of promoting creativity and innovation. ¹

Innovations often emerge where (Drucker, 1999a, 1999b; Hamel, 2002, 2012):

1. the relative quality falls;
2. the relative income falls;
3. the relative costs increase;
4. the relative productivity falls;
5. the diffusion of innovation is greatest;
6. new knowledge has the potential to become new technology;
7. the relative competence increases the most. ²

These seven areas have a large potential individually and in combination to provide fertile ground for innovation. To discover where innovations emerge and how businesses can create their future on the basis of these seven points, we need leaders who understand the importance of strategic innovation management, i.e., who are able to design an idea system that can capture what is happening, choose ideas, and implement the ideas that have the greatest potential for breakthrough.

Student Reflection Task 1

Use the seven areas where innovation may emerge and discuss where in your environment innovation most probably will happen.

The Collapse of Fundamental Experience

Strategic innovation management is based on the collapse of fundamental experience in the global economy and where robots, informats, ³ and digitalization accelerate.

Strategic innovation management is based on the idea that innovations are driven forward by the presence of problems and deficiencies. Where there are problems or deficiencies, one should look for innovations close to the boundaries between various areas of knowledge because that is where innovation is most likely to emerge (Christensen, 2010). As an exercise, one can try conducting a thought experiment in order to connect things that have not previously been in contact with each other and see what emerges (Da Vinci, 2006). Disconnecting innovation from a specific problem is like taking a fish out of water to study how it swims, or dissecting a bird to investigate its aerodynamic properties. Strategic innovation management is based on the idea that innovation will emerge through the merging of different concepts.

The tightrope walker needs to constantly shift position to reach the end of the line. The point of this example is that stability is dependent on change, but change is also dependent on the existence of a stable core. If everything is changing at the same time, the result will be chaos. If everything is stable, the result will be rigidity. Rigid systems fail if there is the slightest change. Chaotic systems lose all energy to maintain stability.

What we do here to design a stable core that can be used in any change process, both planned and emerging changes, is to integrate Stafford Beer's theory of viable systems (Beer, 1979, 1981, 1985, 1994) with James G. Miller's theory of living systems (Miller, 1978) and Russel Ackoff's thinking about interactive planning and the circular organization (Ackoff, 1976, 1982; Ackoff & Emery, 2007; Ackoff, Magidson, & Addison, 2006; Ackoff & Rovin, 2003).

Leaders often experience something that we might call “funfair management.” Just as children think they are steering the cars on a funfair roundabout, leaders think they are steering the organization when they make many decisions – although nothing...

Table of contents

• Cover
• Title
• Copyright
• Table of Contents
• Foreword
• Acknowledgments
• Prologue
• Chapter 1 The Future Role of Leaders
• Chapter 2 Strategic Innovation Management
• Chapter 3 Moral Courage
• Chapter 4 Prosocial Behavior
• Chapter 5 Curiosity
• Chapter 6 Chapter on Concepts
• Appendix 1
• Appendix 2
• Index