An Integrated Approach to Promoting Innovation in an Organization

An Integrated Approach to Promoting Innovation in an Organization
Mohammad Essawi1 & Oleg Tilchin1
International Journal of Business and Management; Vol. 9, No. 7; 2014
ISSN 1833-3850 E-ISSN 1833-8119
Published by Canadian Center of Science and Education
70
1 Al-Qasemi Academic College of Education, Baqa El-Gharbieh, Israel
Correspondence: Oleg Tilchin, Academic College of Education P.O. Box 124, Baqa El-Gharbieh 30100, Israel.
E-mail: otilchyn@yahoo.com
Received: March 24, 2014 Accepted: May 28, 2014 Online Published: June 22, 2014
doi:10.5539/ijbm.v9n7p70 URL: http://dx.doi.org/10.5539/ijbm.v9n7p70
Abstract
The suggested approach promotes innovation in organizations through construction and coordinated use of an
accountability system, combined assessment system, and adaptive reward system. The approach provides the
involvement of the largest possible number of employees in the creation and assessment of the innovation
proposals. First, managers determine the possible directions for attaining the desired organizational result, form
the reward conditions aimed at intensification of collaborative innovational activity of employees, and inform the
employees about these conditions. Next, the submission of innovation proposals by employees is realized. Then,
the submission process is managed. Next, the combined assessment of the employees’ proposals is realized. The
assessment involves managers and peer assessments of the proposals, and assessments of the willingness to
collaborate in building innovations. It allows calculation of the proposal weight, which is determined as a sum of
its coefficient of significance and a coefficient of collaboration. Next, the most preferable course of action, and
the key employees who can attain the desired result are determined. Next, accountability at different levels for
building innovations is set, owing to the presented innovation proposals. The extent of accountability of the
employee conforms to the proposal weight. The greater extent of the accountability is set for the key employee.
Finally, the adaptive rewarding of employees is accomplished. Innovation rewards are divided according to the
proposals’ weight. Adaptability of reward is reached by adjustment of reward size in accordance with the
dynamics of creating the innovation proposals, the extent of accountability of the employees, and the roles of
employees in the assessment of peer proposals.
Keywords: innovation, assessment, accountability, rewarding an organization
1. Introduction
Survival of an organization in a modern dynamic and competitive environment requires continuous improvement
of organizational performance. It can be attained through creating an innovation culture directed towards
developing the innovation capability of the organization (Lawson & Samson, 2001; Horibe, 2009). The
innovation capability of the organization provides for the possibility of innovation activity aimed at
“development and implementation of new ideas by people who over time engage in transactions with others
within an institutional order” (Van de Ven, 1986). An innovation is a result of realizing an innovation process
(Poole, Van de Ven, Dooley, & Holmes, 2000; Jones, 2012).
The innovation process can be presented by the following phases: determining strategic directions to improve
organizational performance; creating innovation proposals according to specified directions; choice of the most
effective proposals following assessments; and building innovations on the basis of these proposals.
Promotion of innovation can be attained through use of different mechanisms of innovation management (Bettina
von Stamm, 2008; Shephard & Ahmed, 2010; Ettlie, 2011; Tidd & Bessant, 2013). One applicable mechanism is
the knowledge management (KM) mechanism (Rodney, 2000). The central problem of KM consists in
management of tacit knowledge, its conversion in explicit knowledge, and knowledge sharing among employees
(Nonaka, 1994; Botha & Snyman, 2008; Dawson & Andriopoulos, 2014). Tacit knowledge is experience-based
knowledge embodied in people (Sternberg & Horvath, 1999). Explicit knowledge can be found in documents
(Wellman, 2009). The most valuable knowledge is tacit knowledge (Hislop, 2009; Dalker, 2011). This type of
knowledge promotes innovation and sustains competitive advantage (Gamble & Blackwell, 2001; Wellman, 2009).
However, management of tacit knowledge is extremely problematic.
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The culture of organizations can have a negative influence on innovation because of the presence of an obstacle
in knowledge sharing among employees through the organization. The obstacle is caused by rigid organizational
structure, and restriction of employees that prevents them from experimenting with new ways of thinking and
acting. However, organizations should possess a culture providing motivation for innovation with the help of an
appropriate reward system (Nacinovic, Galetic & Cavlek, 2009; Glasberg & Ouerghemi, 2011).
A significant element of promoting innovation is accountability, which gives employees and an organization a
sense of purpose (Evans, 2008). Creating efficient personal accountability should be based on willingness and
the desire of an employee to realize actions.
Hence, effective KM in an organization can be attained by creating an innovation culture, which determines the
new way of thinking and behavior in employees, leading to the building of high-quality innovation (Horibe,
2009). The innovation culture requires creating a specific result-based accountability system, effective
assessment system, and adaptive reward system for building innovation. It should provide the involvement of a
maximal quantity of employees in an innovation process, and collaboration among employees through all levels
of the organizational structure.
Therefore, the goal of this paper is to develop an integrated approach for promoting innovation in an
organization through coordination of work and a result-based accountability system, combined assessment
system, and adaptive reward system.
2. Literature Review
Research directed towards promoting innovation in an organization is examined. It involves: improvement of
organizational performance through innovation; the influence of organizational culture on innovation,
knowledge management, creating accountability, and motivating employees through rewards.
Improvement of organizational performance through innovation requires realizing determined practical actions.
Tidd & Bessant (2013) determines the requirements for building an innovative organization. These requirements
are shared vision, leadership providing a creative climate, appropriate organizational structure, key employees,
high involvement in innovation, effective teamwork, pushing for knowledge, and observing others. Brands &
Kleinman (2010) suggest the practical steps to achieve improvement of organizational performance and business
growth through innovation. The basic steps are inspiring, creating needed values, building accountability, idea
management, observing, measuring, and rewarding. Ettlie (2011) unfolds the dependence on innovation
strategies from organizational strategies. The author describes the innovation process and shows the important
role of collaboration in this process.
Innovation in an organization can be influenced by a specific organizational culture. Essawi (2012) created the
structured dynamic value confrontation leadership model for organizational culture change. The model provides
constructive confrontation by changing current employee values according to the required organizational values.
Martins & Martins (2002) suggest determinants of organizational culture that influence creativity and innovation.
The determinants are leadership strategy, flexible organizational structure allowing freedom and group
interaction, recognition and reward, behavior that encourages innovation, and communication possibility.
Westover (2011) describes leadership practices and methods for creating organizational culture to promote
innovations for driving organizational effectiveness. Wellman (2009) describes leadership roles that can
facilitate organizational culture change in providing effective KM.
Organizational culture fostering innovation should induce knowledge sharing among employees. Thus, Bukowitz
& Williams (1999), Park & Schulte (2004), and Gamble & Blackwell (2001) emphasize the importance of an
organizational culture promoting the willingness of its employees to share their knowledge that allows for the
transfer and the creation of knowledge. O’Dell & Hubert (2011) illustrate the building of a knowledge sharing
culture as an important part of their strategy for making KM successful. The authors claim that recognition is
needed to energize employees.
Pasher & Ronen (2011) affirm that successful knowledge creation and knowledge sharing in an organization are
a result of a management style based on shared cultural values. The values are trust, innovation, and respect for
employee knowledge. The authors emphasize the necessity to encourage employees to contribute their
knowledge in the means of organizational development and suggest methods for promoting interactions in order
to foster knowledge creation and knowledge sharing in organizations.
Success of innovation activity in an organization depends on efficiency of KM. Hislop (2009) represents an
approach to the facilitation of KM through organizational culture change and human resource management
practices, including performance evaluation and rewarding employees. Rodney (2000) examines the constitutive
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role of KM in supporting, sustaining and enhancing innovation activity in organizations. The author suggests a
KM model oriented to increase innovation within the organization. Seidler-de Alwis, Hartmann & Gemünden
(2004) substantiate the crucial role of tacit knowledge on the innovation management process. It allows the
authors to represent innovation management as tacit knowledge management, and to develop an integrated
model describing the impact of tacit knowledge on successful innovation management.
KM characterizes innovation capability of an organization. Cavusgil, Calantone & Zhao (2003) examine
different aspects of the relationship between tacit knowledge transfer and innovation capability of an
organization. Lawson & Samson (2001) define innovation management as a form of organizational capability.
The authors suggest an aggregate of elements characterizing an innovation capability of an organization. The
aggregate embraces vision and strategy, competence and organizational intelligence, creativity and idea
management, organizational structures and systems, culture and climate, and technology management.
Creating correct result-based accountability promotes innovation in an organization. Samuel & Chiche (2004)
determine accountability as action that’s consistent with the desired outcomes of an employee. The authors have
developed the personal accountability model, furthering realization of intention to stay accountable. The model
components are: recognize, own, forgive, self-examine, learn, take action. Connors & Smith (2011) consider
creation of accountability culture in an organization as a result of consecutive realization of the steps conducive
to employee accountability. These steps are: see it, own it, solve it, and do it. Evans (2008) claims success of an
organization requires embedding accountability into its strategy, determining clear expectations, and creating
relationships among team members based on accountability. Owing to this, job satisfaction and organizational
performance are improved.
Motivation of employees through reward can serve as a basic factor of innovation intensification. Nacinovic,
Galetic & Cavlek (2009) argue that an organization must have an appropriate reward system that promotes
innovation. Glasberg & Ouerghemi (2011) emphasize the importance and the key role of employee motivation
for building innovation in an organization. They assert a reward system within an organization motivates
creativity, engendering innovation from employees.
The analysis of the above publications shows that the challenges associated with the promotion of innovation in
an organization through the providing of effective KM and energizing the creativity of employees remain. An
organizational environment inducing employees toward innovation has not been created. Self-forming
collaborative groups of employees through all levels of organizational structure aimed at building innovation
have not been specified. A balance between competition and collaboration among employees for innovation has
not been achieved. Stimulation and facilitation of employees’ tacit knowledge externalization have not been
realized. Recognizing and rewarding employees has not been connected with the measurement and the
assessment of their accountability and contribution to innovation process. The key employees who can be
accountable for attaining the desired results and the most preferable course for organization performance
improvement are not determined.
Therefore, there is a need for development of the integrated approach aimed at promoting innovation of
employees in an organization through building and providing coordinated use of a result-based accountability
system, a combine assessment system, and an adaptive reward system.
3. The Integrated Approach to Promoting Innovation in an Organization
The review of research allows for conclusion that desired organizational results can be attained by creating an
organizational environment that induces innovation of employees.
The goal of the approach is to promote the creation of innovation proposals by employees, determine the most
preferable course of action, and determine the relevance of key employees in building innovations conducive to
improvement of organizational performance.
The goal is reached by providing:
 Awareness in employees about the possible directions conducive to a desired organizational result,
reward conditions, and innovation activity in their peers;
 Managed submission of the innovation proposals, engendering self-forming collaborative groups for
building innovation through all levels of organizational structure, and a balance between competition
and collaboration among employees;
 Combined assessment of the innovation proposals, allowing determination of the most preferable course
of action and the key employees;
 Building employee accountability for innovation based on intellectual willingness;
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 Adaptive rewarding.
The approach intends consistent performance of the determined steps.
Step 1: Determination and declaration of the reward conditions and the possible directions conducive to a
desired organizational result
An organizational result which should be attained by an organization is established. Attaining the result requires
productive innovation activity from employees. The possible directions to attain the desired organizational result
are determined and declared by managers. The employees are informed about the need to submit their innovation
proposals according to the possible directions.
Aspiration to induce the employees toward innovation activity causes development of the formative conditions
of rewards for innovation proposals conducive to attaining the desired organizational result. All employees
participating in the creation and assessment of peers’ innovation proposals are awarded according to determined
conditions. The reward conditions take into account all of the possible roles of an employee in the innovation
process. The roles are: creator of an innovation proposal; valuator of the peer proposal; and wishing to
collaborate in building the innovation on the basis of the proposal. Prior employee familiarity with the reward
conditions is realized.
Step 2: Managed submission of innovation proposals by employees
An employee explores the possible directions that could lead to attaining the desired result. Then, self-evaluation
of an employee’s ability to prepare innovation proposals according to the directions is realized. Owing to
self-evaluation, the employee submits his (her) proposals.
The employee proposals are manifested in the organization for peers’ awareness.
The employee examines the peers’ innovation proposals. As a result of examination of peer proposals and
self-evaluation of his (her) ability, the employee makes a decision to submit a personal proposal, or to assess
peer proposals, or to collaborate in building innovations on the basis of peer proposals. Thereby, a balance
between competition and collaboration among employees is attained. If an employee can’t create a proposal, he
(she) can’t compete with peers, but can make a decision to collaborate. If an employee created a proposal, he
(she) competes with his (her) peers. Yet, he (she) can also collaborate with other employees for building
innovations based on the proposals.
The aspiration to encourage creation of qualitative proposals requires management of innovation proposal
submission. The management introduces the limitations and the changes. The limitations are the general quantity
of proposals that may be submitted by an employee; the quantity of the proposals that may be submitted by an
employee for each possible direction; the quantity of the proposals and the development and realization of which
an employee may collaborate on; the quantity of the proposals which may be assessed by every employee.
Restricting the general quantity of the proposals that may be submitted induces an employee to prepare
qualitative proposals that correspond the most to his knowledge. Restriction of the quantity of the proposals that
may be assessed by every employee is created by two factors: employee inducement to choose for assessment
only the proposals that correspond the most to their knowledge; aspiration of employees to receive the maximal
reward for assessment.
Changing the quantity of the proposals which may be submitted by an employee relative to each possible
direction allows for receiving more proposals corresponding to the directions that are the most suitable for
attaining the desired result with respect to the standpoint of the participating managers. A change in the quantity
of the proposals where the employee is allowed to collaborate with their authors is created by the aspiration to
balance between energizing collaboration and motivating employees to choose the proposals best for
collaboration and building corresponding innovations that would be the most suitable in terms of knowledge and
preferences.
Step 3: Combined assessment of the innovation proposals
Managers and peers assess the innovation proposals. Availability of manager assessment in the combined
assessment of the employee proposals characterizes the extent of manager influence on choosing the most
productive proposals. The absence of manager assessment is the evidence of absolute independence of
employees in assessing proposals of their peers.
Assessment of an innovation proposal is realized on the basis of the established range from 0 to 5: 0 – a proposal
is not actual; 5 - a proposal is a breakthrough.
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Example 1:
Assessments of j proposal by four employees are 2, 4, 5, 5. Then, the total assessment cj of the proposal is equal
to 16.
The significance coefficient sj of j proposal is calculated by the formula:
sj = cj /5nj , (1)
where:
cj is total assessment of j- proposal, j= 1, …, m; m is the quantity of the assessed proposals,
nj is the quantity of the assessment participators of j- proposal.
The range of the significance coefficient is 0 to 1.
Example 2:
The total assessment cj of j- proposal by four employees is equal to 16. Then, the significance coefficient sj of the
proposal calculated by formula (1) is equal to 0.8.
The assessment participators in an innovation proposal can express the wish to collaborate with the author of the
proposal in building the innovation, since according to their opinions the proposal corresponds to their
professional abilities, and with the proposal author, they can work effectively. The collaboration coefficient for
each proposal can be calculated. The collaboration coefficient for the proposal with maximal quantity of the
desire to collaborate is set as a fixed value. The collaboration coefficient for each from others’ proposals is
determined relative to the fixed value pro rata number of wishing to collaborate.
Example 3:
There are five innovation proposals. The number of employees wishing to collaborate in building innovation on
the basis of each proposal equals 5, 4, 3, 2, 1, accordingly. The maximal quantity of wishing to collaborate
equals 5. This value corresponds to the first proposal. The collaboration coefficient for this proposal is set equal
0.15. Then, the collaboration coefficients for others’ proposals equal 0.12, 0.09, 0.06, and 0.03, accordingly.
An innovation proposal weight can be determined as the sum of its significance coefficient and the collaboration
coefficient. The proposals are ranged on the basis of calculated weights. Thereby, the assessment system
involves total assessments of the proposals, the significance coefficients of the proposals, the collaboration
coefficients for the proposals, and the proposal weight, and provides the relationship among these components.
Step 4: Determination of the most preferable course of action and key employees for attaining the desired
results
At first, suitable directions for attaining the result are determined. These directions are revealed on the basis of
innovation proposals presented by employees according to the possible directions to attain the desired
organizational result and are set by management. Thus, the lack or minimal quantity of the received innovation
proposals relative to some possible direction reveals its infeasibility for attaining the result because of the
shortage of intellectual possibilities of employees corresponding to this direction. On the other hand, the
maximal quantity of the received innovation proposals relative to some possible direction allows characterization
of the direction as suitable for attaining the result due to the availability of the necessary intellectual abilities of
employees.
Then, the most preferable course of action to attain the necessary organizational result is chosen by managers
from the suitable directions due to comparison of total assessment weights of the proposals presented relative to
each from these directions. The direction having maximal total assessment weight from presented proposals
receives status of the preferable course of action.
Finally, the key employees for attaining the desired results are determined. They are the authors of the proposals
presented relative to the most preferable course of action.
Example 4:
There are two suitable directions for attaining the necessary organizational result; the assessment weights of
innovation proposals presented relative to the first direction equal 8.15, 9.12, 7.09, 8.06, and 5.03, and the
assessment weights of innovation proposals presented relative to the second direction equal 7.15, 1.12, 8.09, and
6.06. Then, total assessment weights of the proposals presented relative to these directions are 37.45 and 22.42,
accordingly. Comparison of the total assessment weights of the corresponding proposals allows for the
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conclusion that the first suitable direction must be chosen as the most preferable course of action for attaining the
necessary organizational result.
Step 5: Creating accountability for innovation
Submission of the innovation proposals by the employee is evidence of his (her) intellectual willingness in
taking high level accountability for building the corresponding innovations.
The desire for collaboration in building innovation propels the employee to share accountability with the author
of the proposal. It allows for determination of the peers suitable for the collaborative building of innovation
together with the proposal’s author, and to create a middle level of accountability. The desire to assess the peer
proposals creates low-level accountability of the employee.
The extent of employee accountability conforms to weight of his innovation proposal: the bigger its weight, the
more accountability from the employee for innovation. Key employees should take accept greater accountability,
since they are accountable for building innovations on the basis of their proposals. Furthermore, if there are some
proposals from the key employee relative to preferable course actions, then his summary extent accountability
equals the sum of the extent of accountability corresponding to the proposals.
Step 6: Adaptive rewarding of employees for innovation
Innovation reward is divided according to the innovation proposal’s weight: the bigger its weight the greater the
reward that’s received.
Example 5:
The size of the innovation reward equals $1,000. There are five innovation proposals. The proposal weights
equal 0.7, 0.6, 0.5, 0.4, 0.3, accordingly. Then, distribution of reward among the proposals results in $280, $240,
$200, $160, $120, accordingly. The accountability extent of the proposal’s first author is bigger.
The predetermined size of the proposal reward is divided between the author of the proposal and the participators
in its assessment, e.g. the author receives 80% and the participants receive 20% of the proposal reward.
Example 6:
The predetermined size of the first proposal reward is $280 (Example 5). Then, rewarding the author of the
proposal equals $224. Rewarding the peers assessing the proposal equals $56.
Rewarding peer-participators of proposal assessment is divided on the basis of their roles, i.e. whether an
employee only assesses an innovation proposal or wishes to collaborate with the author during building an
innovation based on a proposal. The employee wishing to collaborate should have a higher award.
Integral personal award of an employee is calculated by the summation of his awards as the author of a proposal,
participator of assessment of peer proposals, and in wishing to collaborate in the realization of the proposals.
As appears from the above, the place of the proposal is determined based on its weight, which reflects the
assessments of managers and peers, and the wish to collaborate. However, the proposals with equal weights may
get different rewards, which are caused by the aspiration to provide preferable influence of one of its parameters
forming the assessment weight. Dividing the reward determined for the proposal between its author and the
employees assessing it depends on the need to stimulate either the preparation or assessment of the proposals.
The reward intended for the employees assessing proposals is divided among them by taking into account their
roles in the assessment. If there is necessity to stimulate collaboration in an organization, then the greater part of
the reward is presented to those wishing to collaborate. Furthermore, the proposal presented relative to the most
preferable course of action for attaining the necessary organizational result must receive a greater reward.
The adaptability of rewarding is attained owing to adjustment of the size of reward with regard to the dynamics
of the process of creating innovation proposals, the extent of an employee’s accountability (an employee which
holds greater accountability receives a greater reward), and the roles of employees in assessment of peer
proposals.
Thereby, an adaptive reward system provides coordinated functioning in its components. The components divide
innovation rewards among the proposals according to their weights; divide the proposal reward between the
author of the proposal and the participants in its assessment; divide the reward of peer-participators of a proposal
assessment according to their roles in assessment; calculate the integral personal award; adjust the reward size
according to the dynamics of creating innovation proposals, and determine the extent of employees’
accountability.
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4. Conclusion
The suggested integrated approach promotes creation of innovation proposals by employees, determines the
most preferable course of action, and the relevance of the key employees who can take accountability for
building innovations conducive to attaining the desired result in an organization reached by providing awareness
in employees about the possible directions of innovation activity, the reward conditions, and innovation
proposals from their peers; coordinated functioning of the combined assessment system, the result-based
accountability system, and the adaptive reward system.
The assessment system realizes managers and peer assessment, and the assessment of willingness and desire to
collaborate. Owing to that, the proposal weight is set. The proposal weight is calculated as the sum of the
significance coefficient and the collaboration coefficient. The proposals are ranged on the basis of calculated
weights.
The accountability system sets the different levels of accountability for employees and their extent of
accountability, and allows for sharing of accountability among employees. The extent of accountability of the
employee conforms to the proposal weight, and the status of the proposal in attaining the desired organizational
result. Sharing accountability is provided owing to self- formed collaborative groups for building innovations
through all levels of organizational structure, and presence of the balance between competition and collaboration
of employees.
The adaptive reward system induces employees’ innovation activity through adjustment of the size of rewards
according to the dynamics of the process of creating innovation proposals, roles of employees in the assessment
of peer proposals, and the accountability extent of the employees.
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