What can leaders do to foster organizational-level innovation? Research has shown that the secret lies in harnessing the power of the team.
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Researchers have long recognized that the ability to innovate is one of the key drivers for business success. This is particularly true in small organizations that do not engage in research and development (R&D) spending, and which therefore rely more on process innovation to drive results. Firms that are better able to innovate are more profitable, more sustainable, and more competitive.
It has also been recognized that leadership plays perhaps the most crucial role in fostering and maintaining an innovation-centric organizational culture. Leaders who can facilitate and foster a climate that encourages innovation are generally more successful in achieving performance goals in areas both directly and indirectly related to innovation.
Recognizing that leadership plays a crucial role in fostering innovation also implicitly recognizes the primacy of teams over individuals. A leader who recognizes the value of a high level of organizational-level innovation is also one who understands that the key mechanism required to achieve this exists within the realm of team dynamics. Because while an individual can often be innovative in relation to her specific work role, one single individual will have little impact on developing an innovative culture in a broader organizational capacity. In other words, no matter how many innovative individuals an organization might employ, the key to fostering organizational-level innovation lies in the power of team dynamics and the ability of teams to develop creative ideas and then execute them in a way which creates value for the firm.
Managers and team-level innovation
Management research has been consistent in demonstrating three separate functions which leaders can do to improve the organizational-level innovative capabilities of teams. In the first case, managers can help to foster idea generation by building and encouraging autonomy and independence in the operational work space, both at the individual and at the team level. In the second case, managers must also ensure that such autonomy is partially guided via the development of team goals, team norms, and behavioural guidelines. In the third case, managers must be able to effectively channel a high level of team innovation into positive and value-creating outcomes (in most cases a new product, service, or process).
The leadership style which brings these relatively disparate functions under one coherent framework is considered by most management researchers to be transformational leadership. In contrast to a transactions-based approach to management (“I’ll give you X if you do Y”), a transformational leader focuses on building and sharing a vision with subordinates, and then ensuring through persuasion that subordinates share that vision. Rather than focusing on what an individual might gain on a personal level, transformational leaders influence followers by appealing to their emotional needs and by fostering a mission-centric approach to teamwork and the success of the firm. Such an approach helps to encourage followers to make self-sacrifices and to put the needs of the organization about their own material needs. Transformational leaders accomplish this outcome primarily by making followers aware of the importance of tasks and associated outcomes, raising follower consciousness in relation to the organization, and activating what are often referred to as “higher-order” needs (such as self-actualization, a feeling of ethical alignment with colleagues and superiors, and the need to feel that one is contributing positively in the work space).
Since transformational leadership practices are directly related to fostering team success, it makes sense to use such principles to also foster team creativity and innovation. Research has shown that a team which is engaged and driven is also one which is more inclined towards creative output and the successful execution of such output into meaningful products or services. In other words, applying principles of transformational leadership not only allows teams to become more competitive and goal-oriented; it also allows them to be more innovative.
Principles in Practice
Small organizations are particularly poised to benefit from the positive impact that transformational leadership can have on team innovation. But applying a transformational leadership approach to the management of teams is a challenging undertaking. Because behavioural norms and team cultures can develop quickly and unconsciously, a leader must implement a transformational approach as early as possible before bad practices become embedded. In addition, leaders of small firms must recognize that an organizational culture of innovation does not happen in a vacuum. Leaders of organizational sub-units (permanent departments or task-oriented temporary units, for instance) can have their efforts easily undermined if other leaders in their organization base their leadership styles on a solely transactional approach.
While transformational leadership behaviours have been shown to have a positive impact at every level, they have also been shown to be easily undermined if the experience of subordinates is not consistent across the organization. For instance, in the case that a leader employs a transformational style with a temporary group of followers who are not solely responsible to that leader, the experiences of those employees in other units and with other leaders can have make it more challenging to accept a transformational approach.
Another area which can create problems for a sub-unit leader is if her efforts are perceived to run counter to the culture of the larger organization. In a working culture that places heavy emphasis on transactional incentives (for instance, a commission-based sales organization), and particularly if this transactional approach is considered vital for the success of the organization, then a leader employing a transformational approach might be perceived as “rocking the boat”. At the same time, if a follower perceives her organization as being too focused on transactional incentives, a sub-unit leader who employs a transformational approach might draw a greater level of loyalty and dedication from that follower.
On the other hand, it is often the case with small firms that they possess a flat hierarchy, or only one level of reporting (all employees report directly to the leader). In this case, there is a significant opportunity for the leader to set a transformational tone, particularly when the team is initially formed. In this case, there is also potentially less risk, since the leadership style will does not have the potential to be undermined by other forces within the organization.
1. The ability to innovate at the team and firm level can be a significant competitive advantage for SMEs
2. Leadership style plays a key role in fostering an innovation-centric culture
3. Transformational leadership offers one of the most robust leadership styles for fostering an innovation-centric work place
4. While fostering innovation at the individual level is important, it is far more important (and more impactful) for leaders to focus on developing the innovative capabilities of teams
Tags: Team innovation, Transformational leadership