In today’s business, what gets the business world going round is innovation. And what Ghanaian corporations also don’t do well at is innovating. Lack of innovation may be implicated in the demise and ailing financial status of a number of firms in Ghana. Firm innovativeness is what distinguishes effective and market leaders from others. Being the first to come to the market with a product or coming up with a smart way of selling a product will offer the firm a competitive advantage over its competitors. What is innovation? Why is it important to corporate Ghana? I will attempt to demonstrate to reading public and management what they can do to create an innovative workforce. I want the readers to understand that whatever I say is based on understandings in Industrial and Organizational Psychology.
Innovation may be defined in different ways depending on the index or indicator of innovativeness one uses. For convenience sake, I will define it as adopting ideas either new to the company’s industry or merely new to the company. This means innovation as defined here will include finding new ways to do the old things better or introducing ideas that never existed in the company’s industry. This way finding a new way of selling an old product to customers is innovation. Creating a new market for an old product is surely innovative. Why is this important? Let’s show why it is important by thinking of its possible role at all the phases of organizational or product cycle. The phases are introduction, growth, maturation and decline or stagnation. Introduction is the phase during which an entrepreneur sets up a new business to sell a new idea while growth phase is when the idea is gaining market and the largest revenue ever can be made out of it. Growth phase is a time that management may not see a need to innovate because their sales or revenue realized from a business idea or product is high. Innovation is particularly important at introduction, maturation and decline or stagnation phases.
At introduction, the entrepreneur has to find a creative way to sell his or her idea to the consuming public. He or she has to give the consumers reasons to buy the product he or she is trying to sell to them. What will make a difference is being able to tell consumers why they should buy their product when competing products already exists. What will make a difference is being able to find a creative way of packaging, selling and even creating new market for a bar of soap that can compete effectively with key soap, a key product of Unilever Ghana. This means that to introduce a new product that will result in maximum sales requires innovativeness. That is thinking of an “unthinkable” way of selling it in terms of the four P’s (product, place, promotion and price) will mean a lot in terms of volume of sales and profits to be realized.
At maturation, management has probably made the best they can out of the sale of the product and may have possibly reached a break-even point. This means that the product is probably less profitable than during the growth phase. This phase therefore presents a challenge to management to get more out of a mature market or phase it out and introduce a new product. If nothing gets done by management then the product or the company declines in sales and eventually dies off. But management can do something about this by being innovative. The ongoing discussion indicates that innovation is very important for the sustainability of an enterprise. What is therefore left for management is knowing how to create an innovative workforce which can turn around a dying product or company.
At this time management may be wondering just how they can create innovative workforce and be able to get creative ideas from their employees. I will provide some practical recommendations based on key human capital management practices. In this respect, we will consider personnel selection, training, team-working, company rules and policies, performance management, job redesign, innovation-based reward systems, to mention a few. How does personnel selection ensure that a company has a creative workforce? As a graduate student in Industrial and Organizational Psychology, my response will be simply there are individual differences in our ability to be innovative or creative and as a result, we should select job applicants who have the greatest propensity to innovate to begin with. In other words, selective hiring is a requirement. An organization that has a large proportion of its employees having a natural tendency to be creative is likely to be innovative, ceterus paribus. Again given my professional training, I will not leave it hanging. What should management assess as they collect personnel data on job applicants? The answer is very simple; they should include a measure of creativity as one of the selection battery. Management can assess creativity with proximal and distal predictors. Thinking along the line that creativity is an individual difference, management can measure this individual difference. Any trained psychologist can assist management in assessing that but those with most knowledge in this area will be the Industrial and Organizational (I/O) Psychologist. Research in I/O psychology suggests that one personality factor known to us as “openness to ideas” which forms that of what we psychologists call the Big Five captures the individual difference of creativity. In addition to personality testing, other psychometric approaches which I refer to as idea-generation tests can be used to assess creativity as individual difference. The caution is that only those trained in psychology or I/O psychology in particular can do this properly because there are issues of validity (whether what is being used really assesses creativity and not something else; it’s similar to accuracy) and reliability (whether the tool produces consistent measurements and is similar to precision) of the assessment tool. Perhaps, management can hire a group of people to generate saleable ideas in the company.
Training is the next thing to do. Training is needed whether or not the core function of the employee’s job is to generate ideas. This should focus on facilitating the acquisition of the basics skills and principles of the business. When armed with this, employees will do a better job of modeling the ideas based on the company’s industry. This way it will be easier for them to identify saleable from non-saleable ideas. The training should also help the employees acquire skills in brainstorming and working in teams. This leads us to the next important thing management can do to be innovative, team-working.
Management can form cross-functional teams of knowledgeable employees whose objective will simply be something like “Find 10 new ways that we can sell product SETH by next two weeks” or “Identify 5 new ways we can regain our market of product SETH from our competitors”. These simple instructions backed by true management support could have saved so many corporations in Ghana. Ghana Airways? In other words, constituting a team is not enough. It requires that the team be filled with knowledgeable people of diverse functional backgrounds, if the problem to be solved is company-wide. Even when it is a local problem limited to a unit or department, my best guess is to make the team a little cross-functional because from the systems perspective that unit is a subsystem whose activities and for that matter any change effected within it will affect the other units or departments.
It is true that errors have cost to them. But to be innovative means to explore ideas and do some trial-and-error kind of thing. This means that company policies and rules should permit “thinking outside the box”. I believe that no employee will want to think outside the box when she knows that can cost her her job. The solution for management may be to hire people whose primary role will be to innovate, just like the R & D departments of the manufacturing companies. This idea leads to job redesign. Traditional R & D appears in many service industries under different names, business development or labels like that. My best shot at this will be to give enough autonomy to the employees who as a requirement must innovate. Perhaps, companies may need intrapreneurs (internal entrepreneurs) in almost all work units to facilitate innovation within the organization. It will not surprise me that soon such job titles like HR Intrapreneur, Sales Intrapreneur and others like that will be on work role profiles or job descriptions.
Having such intrapreneurs or employees who has as part of the job to innovate in the workplace may also require that innovation is made one of the performance criteria. If an employee is required to innovate then it only makes sense also to monitor his or her performance in relation to innovation. For instance, the number of ideas he or she generates that gets implemented, proportion of sales to total sales that is produced by the ideas, and other similar criteria can be useful in communicating to both management and the employee whether or not the employee is doing what is required of him or her. This also means that the company also put in place a mechanism to measure its innovativeness at organizational level. There are many indicators of innovation available that any management can use. It is up to them to find the experts like Industrial and Organizational Psychologists to help them to set up their measurement and monitoring systems.
It may be brilliant to have intrapreneurs, train them, make innovation part of their performance assessment, make the company rules encourage generation of saleable ideas, without a supportive leadership it is a waste; all the ideas will just die before anything is made out of them. In other words, such employees require a different kind of supervision. They need supervisors who will empower them and champion their ideas to management for funding. Setting aside fund for just this may do the trick. But the idea or product champions or the supervisors of the intrapreneur must justify to management why funding must be made available to his or her subordinate.
What happens to the rest of the workforce? Aren’t and can’t they be innovative? Management should set up a desk where ideas generated by the employees will be sent. It is up to management to figure out how to do this but the surest way will be to communicate to the employees the appropriate intrapreneurs to whom they can share their ideas. Employees will be willing to come forth with ideas if they are recognized for their ideas. Recognition is therefore very important in innovation; letting people know that I told management what to do to save some money will be really important to me. The other aspect is having a reward system in place that shares the savings (gain-sharing) or profits (profit-sharing) made as a result of implementing the ideas. Most management will be reluctant to do this. However, giving a small token and a certificate of recognition for the idea has the potential of making the employee in question and others to look for new great ways of doing the old business.
What I want to say is that it will be an illusion for management to think that innovation comes at no cost. It does but pays off in the medium- and long-term and sometimes even in the short-term. I hope I was able to tell management and the reading public why innovation is important and what they can do to create a more creative workforce.
Seth Oppong
Post-graduate Student in Industrial and Organizational Psychology, Department of Psychology, University of Ghana, Legon
Currently, serving as a visiting research scholar at North Carolina State University, Raleigh, NC, USA Readers should note that whatever you read is based on my studies in Industrial and Organizational (I/O) Psychology and some experiences. One professor at NC State University, USA, defines Industrial and Organizational Psychology as one-third mathematics, one-third business and one-third psychology. I/O psychology is all about applying psychology to the workplace.
Source: GNA
