Building an innovation strategy - Tesla

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COMPETENCIES AND INNOVATION WITHIN LEARNING ORGANIZATION

Jarmila Šebestová1, Žaneta Rylková2 1Silesian University, Karvina, Czech Republic, [email protected]

2Silesian University, Karvina, Czech Republic, [email protected]

Abstract Organizations which learn and encourage learning among their people are learning organizations. The

purpose of the paper (which is funded by Internal University Grant System IGS/5/2011 and IGS/7/2011) is to examine important role of skills and knowledge in learning organizations and find the answer to the following questions: Which skills develop innovative environment in organization? Which type of organizational setting must be used to adopt innovations, deal with risk and support learning? In the paper you can find innovated model “Assumptions leading to the effect of innovation” by adding part of competency model to prepare organization for innovation process, creativity support and learning organization. We also suggested competency model called 5C (Care, Competitiveness, Communication, Clarification of Relationship, Culture), which could be used in the future as a metrics of knowledge network. Finally, we believe, that SMEs should be more innovative and competitive when they cooperate, so original output is to measure SMEs preparedness for the innovative network as EISE metrics (Elements, Interactions, Self organization, Emergency).

Keywords: learning organization, innovation, competency model, skills, knowledge. JEL Classification: L20, L21, L29.

Introduction Basis of all changes, that are in business the basis of development, have to be change in people

thinking and there must be established good conditions for planning and realization of needed changes. Already today we generally work with conception of standard minimum level of knowledge and skills. It is necessary to learn that human capital is the main asset of each company, motive power for enterprise. In the long term a sustainable high position in performance of companies is getting currently into jeopardy (entrepreneurship risk) and only human capital is the bottom line for its overcoming.

Nowadays we are meeting with changes, which are managed, that means with innovations, which assume creative and untraditional thinking. New ideas and vision formation, acceptation of all ideas, formation of model situations – that all form the basis of change command. Most frequently we are finding the conception – systematic innovation - because innovations play basic role in actual economics and social transformation. Above mentioned produces a very flexible and opened organization where people will accept and adapt to new ideas and change through shared vision. Building a learning organization is a means to become an innovative company.

Learning Organization By authors Senge (1990); Pedler, Burgoyne, Boydell (1991); Garvin (1993), we define a learning

organization as an organization that is committed to learning. By committed, we mean that the organization is ready to change the way it does things by combining existing knowledge or incorporating new knowledge. Thus, organizational learning processes are neither necessary nor sufficient conditions for a learning organization. But, the existence of organizational learning processes will help the organization to learn. We define organizational learning as the organizational processes aimed at adding value to the knowledge acquired and communicated throughout the firm. As such, organizational learning processes encompass the acceptance and the assimilation of knowledge. We can say that organizational learning is the process that should lead to the building of firm´s competencies and that a valuable learning experience will lead to firm- specific, distinctive competencies.

Organizational learning is a strategic process and a learning organization is the output of this process that will allow the development of new or regenerated core competencies and products. Many studies of learning organizations have attempted to diagnose the characteristics of learning organization. Although different authors stress different elements, the characteristics of the learning organization incorporated in this study have been proposed important features: open communications, risk taking, support and recognition for

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learning, resources to perform the job, teams, rewards for learning, training and learning environment, knowledge management.

Innovation and Learning As for innovation, learning may occur at the individual, group, organization and industry levels

(Shrivastava, 1993). As new outputs, innovations may come from new knowledge as well as from the combination of existing knowledge to create innovations (Henderson and Clark, 1990), using combinative capabilities. Learning means integrating new knowledge or mixing existing knowledge in different ways, learning leads to newness, and thus to innovation. Innovation will be the by-product of a learning organization. A learning organization is a innovative organization. Organizational learning should be positively related to innovation. If a company is good at acquiring new knowledge and articulating existing knowledge with new knowledge or existing knowledge in a different way, this company should be good at producing innovations (product or process). Furthermore, the better the organizational learning process sis, the greater the capacity to develop radical innovations (product or process) will be.

It is important to know, that organizational learning is not necessarily related to innovation´s success. Innovation and innovation´s success are two different dimensions. A successful learning organization leads to the capacity to innovate (Burns and Stalker, 1961), which is the ability of the organization to adopt or implement new ideas, processes, or products successfully (Hurley and Hult, 1998). There is important strategy because if the innovation is not in line with the strategy and the environment of the firm, the innovation may fail and thus the learning-innovation link will not be related to performance. Learning more or faster does not imply that you learn that you have to in order to perform better than your competitors.

Learning must be customized to the circumstances of an organization and the work it conducts. Each organization is different, but the work styles of any organization fall under four models: process, systems, network, and competence. Figure 1 highlights the characteristics of particular work settings and hints thereby at learning needs of each. In brief, the process and systems models correspond to work settings that are routine and require little interpretation. What is needed to perform tasks is know-how, learning takes place through generalized learning and development training with the help of how-to guides. Evaluation and other reports can help as well. However, the network and competence models call for much higher levels of judgment and depend on deeper understanding and insight as well as an ability to improvise. Work on policies, strategies, programs, and projects fits in these domains.

Figure 1. Work Style Matrices (Serrat, 2009)

Competency Evaluation – Linkage for Innovation Thinking Traditional models of skills cover only few variables like structure of organization, climate, processes

and leadership without dynamic points such as behaviour of elements (Damanpour, 1991; Kimberly and Cook, 2008; Burke and Litwin, 1992). The research on the influence of competency attributes on adoption

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and use of innovation usually suffers from variety of measured issues. In these types of organizations there are highly skilled people, but the outcome of learning by innovation or knowledge activities is very limited (Edmondson and Tucker, 2003). On the other hand, many learning activities and innovative projects are made as an answer on the market demand to support business competitiveness. Under this point of view, it could be mentioned, that many innovations are mostly presented as “regional innovations”. Small businesses offer their new services and products on the local market, inspired by original global product, so they mostly offer cheaper, home-made imitation of some innovation activity (Pichlak, 2008).

In many case studies, firms between 10 to 49 employees are proactive in the process of on-going learning and innovative process. They are still under the pressure from the market to offer unique product or service to survive and to be competitive. There are existing qualitative and quantitative barriers to support innovative climate within organization based on owner´s personality, financial sources and others competencies which could cause low innovative activity (Ćwik, 2007).

The purpose of author’s practical research is to examine how important role play skills and knowledge in learning organizations and find the answer to the following questions mainly theoretically defined by Kimberly and Cook (2008) - (1) Which skills develop innovative environment in organization? (2) Which type of organizational setting must be used to adopt innovations, deal with risk and support learning? According to the review of literature that was carried out in advance of any primary research being undertaken, nobody has yet tried to combine this wide area of skills to compare, represented by 120 qualitative items based on methodology of Scroggins and Rozell (2007). A sustainable competitive advantage is an advantage over competition that can be maintained over a long time. To build a sustainable advantage, company typically don´t rely on a single approach such as low cost or excellent service. They need multiple approaches to build their position (Zapletalová, 2008). This multiple approach based on literature review, we managed research goals as follows:

• To innovate Practical model “Assumptions leading to the effect of innovation” (2009) by adding part of competency model to prepare organization for innovation process, creativity support and learning organization (600 active respondents).

• According this want to suggest competency model called as 5 C (Care, Competitiveness, Communication, Clarification of Relationship, Culture), which could be used in the future as a metrics of knowledge network from pre-test phase of the research.

• Finally, we believe, that SMEs should be more innovative and competitive when they cooperate, so original output is to measure SMEs preparedness for the innovative network as EISE metrics based on four pillars (Elements, Interactions, Self organization, Emergency), which finally answer the question of ongoing learning by doing and knowledge sharing under networking process in case of innovation oriented entrepreneurs.

Competency Model Structure The on-line questionnaire collected data from 608 active respondents in the Czech Republic, (during

period of July to December 2010; pre-test phase off-line 120 respondents June to September 2009), who identify main competencies needed for business success. Research sample was formed from people who in the past provided their own business in the role of business owners (22.2 %) and 77.8 % in the role of employee (current situation: employees 82.6% active business owners 17.4%). Respondents described their current company as very small (up to 9 employees in 25.8%), then as small (10 to 49 employees; 31.4%), medium company (50-250 employees; 20.6%) and final group of respondents reached their job in the large company (250+ employees; 22.2%).

The analysis is based on statistic data analysis multidimensional statistic methods in qualitative research area, using Principal Components Analysis (PCA). All collected data were processed in SPSS for Windows, ver. 18. To get more sophisticated results and to identify dominant tendencies, we used PCA with a VARIMAX rotation (factor loading minimization); applicability of data was examined by the Bartlett’s test of sphericity with the values of the presented results being under P<0.05 and for all the data we used the Kaiser-Meyer-Olkin Measure of Sampling Adequacy (KMO) with a recommended minimum value of 0.6 (Sharma, 1996). We used only factors with inter-factor correlation coefficient value more than 0.5 and accounted their share on the total competence model as 100%. Secondly, the research sample was divided into two groups by the gender to compare preferences within examined groups (see illustration below).

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Figure 2. ProInno Skills & Behaviour

In comparison, it could be seen significant differences between business behaviour in the behavioural

model (Pawliczek, 2006). It seems that small businessman understood that not only basic managerial knowledge and procedures like organising, analysing are the way for the success, but you need some other special skills for the position of the innovator as a part of the model maximizing effect of innovations.

Competency Model for Sharing Knowledge Due to comparison between primary data and existing cooperative structures analysis, some extra

value added occasion could be mentioned as an advantage of synergy effect of clustering businesses, who share the knowledge. After that we should suggest mix of qualitative variables, which have influence on competency development at the second stage of the learning organization and are significant for innovations and learning organizations as well.

Figure 3. 5 “C” Sharing knowledge value pyramid

In the figure 3, these simple values mean: (1) Care – development of “database of knowledge”, shared by network members, (2) Competitiveness – network has synergy effect and better money allocation, (3) Communication - effective level between network members, negotiation skills development, (4) Clarification of Relationship - this supports all sequences of cooperation in service providing and new methods transfer (5) Culture – education building, cooperation spirit support.

EISE Metrics for Networking The best solution, how to explain current situation in the area of building learning organizations for

innovation is to provide practical case study in high knowledge intensive services. In order to understand the

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behaviour of physicians as entrepreneurs we must prepare a questionnaire as a primary data source to describe the integrating behaviour in general for hospitals, physicians, pharmacies and other business units, which were in the sector of health care service in 2009 with two basic hypotheses in area of 160 active respondents in the Moravian-Silesian Region.

Two research were follows: Hypothesis H1 “Cooperation will be based mainly on informal relationships and knowledge networking will be a useful output of cooperation”. This hypothesis is valid only for businesses of up to 100 employees. After that the situation changes, the relationship is mainly formal, the stakeholders and managers do not concentrate on cooperation in knowledge sharing and emergency knowledge network building.

Hypothesis H2 “Cooperation is considered to be primary in the clinical chain”. This is based on two types of knowledge chains in these organizations (1) Clinical chain based on highly educated people and experience, because this work requires a high level of cognitive knowledge (2) Health care supply chain which covers the relationship with suppliers like laboratories, pharmacies and other suppliers of services, equipment covered by the full service (mainly outsourced service). This hypothesis was not verified. Every business unit is primarily concerned with cutting costs, so the first stage of cooperation is in the health care supply chain. Because of this there is now room for recommendations about cooperation in knowledge management in small businesses.

For the integration model McDaniel and Driebe’s (2001) suggestion was used and it was accommodated in the conditions of the local environment. If we want to integrate these special types of organizations, we have to accept that in emergency situations they may need a different type of knowledge. Some of them need knowledge about business, some about nursing, some about new drugs or helpful information about problems and diseases of patients. Market forces provide an ideal environment for creating vertical cooperation structures with virtual (IT) support. There are multiple strategies and ways how to coordinate health services to provide managed care in a multidimensional business environment.

Figure 4. EISE metrics

We must count on the following main parts of the system: • Elements - benefits: practical on any level, could help assessments, enhance behaviour, could be

one general practitioner unit, or a department as a part of the Emergency Knowledge Network. For preparedness to postpone non-formal to formal cooperation Florence index of specialization.

• Interactions - dynamic, maximizing potential shows that the system is still generating new ideas, creates added value.

• Self organization - independently creates an informal relationship between members and could help to develop some other “part” of the network.

• Emergency unit – help line or practice cases suggests more focus on decisions, running continuous learning, this is an output of cooperation, it is fundamental, not just a powerful analytical technique.

All of the network members must believe in common values for knowledge management in this field: (1) Everything we do must make sense – in an emergency situation it is important to support a collective mindset and pay attention to business survival, we must also interpret the events around the situation. (2) Continuous learning-dynamic model to prevent errors or failing to provide the service. (3) Thinking about the future – generating knowledge about processes, opportunities, payers, interactions. (4) Being active and dealing with unforeseen events, because is it based on a community of practice – work in the same branch, learn faster, conversation, new introduction.

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Discussion Our work suggests that learning is a key to addressing these challenges successfully. Companies need

to demonstrate that learning leads to innovation and bottom line results. A learning organization has than a culture that supports learning and innovations both by individuals and by the organization itself. We can say that the concepts of the learning organization and knowledge management are increasingly seen as two sides of the same coin – as you learn you gain knowledge which you apply and learn more. Figure 5 shows the assumptions leading to the effect of innovation. The figure shows that company is operating in external environment which encourages and supports or not supports development. The company itself produces products or services and solve problems such as where to obtain funds, information, competencies, customers, knowledge etc. The behaviour of the company influences the market. Influence of the market is much difficult than before, therefore it is necessary to establish new forms of cooperation and to pay attention for building the learning organization. Moreover, all these have to be taken into account in development strategy of company, which is necessary to formulate and implement. Development strategies should include prerequisites for innovation, organizational learning and should lead to achieving an effect.

Figure 5. Expectations Influencing the Effect of Innovation The effect should be connected with measurability, it is necessary to collect not only quantitative but

also qualitative criteria, to monitor market position and build innovative culture which should be in close conjunction with the learning organization. We can´t have innovation without organizational learning. The organizations that will truly excel in the future will be the organizations that will truly tap people´s commitment and capacity to learn at all levels in an organization. Organizational learning, competencies and knowledge management have a purpose insofar they contribute to the success of a company and its competitive advantage. In a short term the contribution may by direct, in the long term it can only be achieved through learning and innovation. Leaders of companies that will bring value to their stakeholders now and in the future have to lead their knowledge workers in their learning efforts and provide guidelines for change. They also need to realize that knowledge is product of learning, a process that requires management and consideration equal to any other most important activity of company. Organizational learning has to be viewed as the core corporate resource that has to be organized and maintained. It´s production never can be limited or restricted to any one topic but it has to have a purpose and be evaluated for its contribution to value creation. Innovations have become important determinant, but also necessity.

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Their economical and business importance predestines developmental tendency and performance growth in economics of states and companies. In management of innovation there is purposeful to understand under innovation a creative human activity, which developed positive change in structure of entrepreneurial subjects and which has results in required and expected positive effect.

Conclusion The challenge facing managers today is to make the effort needed to learn some of the new skills and

techniques, and to put in processes that engage their workforce in programmes of continuous capability development. Learning should be integrated into the doing, as part and parcel of everyday work. It should also be energising, stimulating and fun. Getting the best out of everybody, including yourself to meet the challenges ahead. In today´s conditions of uncertainty and rapid change, many organizations need to reassess focus and direction quickly, rethink how people work together and learn for innovation.

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