The Big Picture…
How can we increase the potential innovativeness of our organisation?
It turns out 3 orientations (behaviours, attitudes, etc) impact the potential innovativeness of our organisation. And in turn the business performance. Increasing these orientations impacts innovativeness and therefore business performance.
These orientations are:
- Market orientation – gathering and using intelligence on customers
- Learning orientation – creating and using knowledge
- Entrepreneurial orientation – how entrepreneurial the organisation is (attitudes and behaviours to innovation, pro-activeness and risk-taking).
Innovativeness is a behaviour and attitude we need our organisations to have. And we want to find the levers to pull in order to increase this. Back in 2004, Hult, Hurley and Knight proposed that there are 3 levers. Or, orientations as they called them. These orientations are the behaviours and attitudes an organisation has that impact innovativeness.
Their paper, “Innovativeness: Its Antecedents And Impact On Business Performance” considered the following three orientations:
And they showed a positive correlation between them and innovativeness. They also showed that innovativeness positively impacts business performance.
All good news. So, let’s take a look at each orientation in turn.
The greater market orientation you have the greater your innovation potential. But, don’t confuse market orientation with “asking the customers what they want”. It is wider and deeper. The common definition is given in “Market Orientation: The Construct, Research Propositions, and Managerial Implications“:
Market orientation is the organizationwide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organizationwide responsiveness to itKohli, A. and Jaworski, B. (1990) “Market Orientation: The Construct, Research Propositions, and Managerial Implications“
And it starts with generating intelligence about the customer. Now, that could be asking the customer. But in our stretch to improve innovation, it also means observing the customer. Identifying jobs they are trying to make progress with (job-to-be-done theory). As well as finding those market attributes we can change, leading us to unserved, or poorly served customers (blue ocean strategy).
But it also includes gathering intelligence about wider changes that may affect the customer. Are there legal or regulatory changes ahead, for example? What technologies are starting to creep into the industry/market?
And again taking a wider view, what are people doing in other industries/markets that might be a good value proposition in your current market/industry?
Here’s a great example of gathering intelligence at a macro level (scroll down the page to access the info) across a variety of industries.
And once you have the intelligence, you need to share it across your organisation. Not doing so, means there is a lack of awareness. Effectively, you have just wasted a lot of money! Sharing information allows connections to be made. And a common sense of purpose towards the value propositions you are creating and offering.
Once you have gathered and shared intelligence…act upon it.
The second orientation is learning.
Learning orientation is the:
organisation-wide activity of creating and using knowledge to create a competitve advantageCalantone, Cavusgil and Zhao (2002) “Learning Orientation, Firm Innovation Capability, And Firm Performance“
This is almost self-obvious using the service-dominant logic lens. Where service is the application of skills and resources to someone’s benefit. The better skilled/knowledgable resources you have the greater your strategic benefit.
In fact, this is captured as a foundation principle of service-dominant logic:
Operant resources are the fundamental source of strategic benefitFoundational Principle #4 of service-dominant logic
Calantone, Cavusgil and Zhao, in “Learning Orientation, Firm Innovation Capability, And Firm Performance“, highlight that learning orientation has four aspects:
- a commitment to learning; (by the organisation)
- a shared vision;
- open-mindedness; and
- a system based aspect of intra-organisational knowledge sharing.
Why does a commitment to learning orientation increase innovativeness? They identify 3 reasons. Firstly, they observe the organisation is likely to be more committed to innovation and have access to technology and use that in innovations. Secondly, the organisation is unlikely to miss opportunities created by emerging market demand. They see the organisation as having the knowledge and ability to react and benefit. And thirdly, the organisation will be learning from competitors successes and failures. Putting it in a better position.
Finally, we turn to the entrepreneurial orientation.
The third aspect acting as a driver for innovativeness is entrepreneurial orientation. Or simply, the behaviours and actions of the organisation to support innovation, pro-activeness and risk-taking.
If you don’t support innovation, are not pro-active and are risk-averse, you will have low innovativeness. And we know from Drucker that “a firm only has two functions – marketing and innovation”. Without the second, your organisation will not last long.
Entrepreneurial orientation can be determined using the Covin & Slevin scale (defined in “Strategic Management Of Small Firms In Hostile And Benign Environments“). Or the Miller/Covin & Slevin scale. This later, given in Covin & Wales(2012) “The Measurement Of Entrepreneurial Orientation“, has 3 scales for each of the 3 areas of.
- pro-activeness, and
Answers at the higher end of the scale imply higher entrepreneurial orientation. Lumpkin and Dess (1996) consider that competitive aggressiveness and autonomy are two additional dimensions of entrepreneurial-orientation.
One of the field’s experts has a very interesting site on Entrepreneurial Orientation and various proposed extensions to the above.
So, how entrepreneurial would you measure your organisation as? And what would you do to move along the various scales?
So there you have it. Improving in these three orientations has been shown to correlate to improvement in innovativeness.