The importance & challenges of Innovative Corporate Culture

Feb 2, 2021 | Education

9 min read

Introduction

True innovation can become a major driving force for the growth and success of a business. Innovation is a process of continual improvement on existing products, processes and services while striving for new ideas, products, services or processes to become an industry leader. Benchmarking the business as ahead of the curve with state-of-the-art solutions for customers. Innovation and change should not be viewed as a danger to the status quo but rather a springboard to more convenient business solutions on all levels. In the period of 2016-18, 30,492 UK businesses were sampled and it was found that only 38% were innovation active. Although it is logically accepted that continually improving to keep up with industry standards and satisfying customers is a good business practice, it is not widely adopted.

Innovation Explained

Innovation can be defined as the incorporation of a new product, quality of the product, method of production or delivery, market, source of supply and/or a new organisation as well as improvement on an existing concept, product, service or process. Innovation is focused on solving problems, improving efficiencies, minimizing waste, and adding value to organisations and customers. Innovation is not confined to small or big companies but can be utilised by any sized enterprise.

Some common pitfalls surround innovation. If it is thought of as suited only to experts then valuable employees might not take part due to feeling unqualified. Small companies often think of innovation as an endeavour primarily for large companies which underestimates the impact it can have on any sized enterprise. Large companies have invested heavily in R&D but ignore other sources of innovation such as their employees, customers, suppliers and the public. Innovation is not only breakthroughs, or disruptions when incremental innovation is a major contributor to success. For example, a mining business changed shift timetables, instead of evacuating mining personnel during work hours for drilling and blasting procedures, shifts started after blasting was concluded, with a new Clocking-In system to ensure safety. This small change resulted in major savings in terms of labour costs. Making it a prime example of incremental innovation and small changes can have a large impact on profitability. Innovation is not an independent process separate from all the other processes in the business. Rather it is the catalyst for the betterment of every area of business processes, systems, supporting services and frontline work alike. Ideally, an innovation mindset should be adopted in the thinking of all employees flowing from upper management downward. Without a plan, support and structure from upper management a simple process can seem intimidating, big and unachievable.

how innovation causes growth graphic

Why is Innovation so Important?

In 2016, approximately 621,000 non-fatal illnesses and injuries were reported by industries in the United Kingdom. This figure, however, is steadily declining and is below the number of incidents that occurred in 2015 and down from previous years. Though many factors have a role in the declining numbers, technological innovation has an integral part in improving health and safety. Innovation increases productivity mitigates risks and decreases human error. It creates new efficiencies and improves safety protocols. The multinational BAM Ireland has used technological innovation to increase on-site quality as well as health & safety by 20%. This freed up time by 25% to be spent on more urgent, high-risk issues.

In 2016 data showed a 4.3% increase in R&D expenditure, however, when measured in proportion to the UK’s Gross Domestic Product, it is a flat 1.67%. Placing the UK 22nd on the Organisation for Economic Co-operation and Development’s (OECD)’s list of countries, behind the Czech Republic, Slovenia and Iceland. Why is this important?

R&D, as it relates to innovation, is a key catalyst and indicator of economic growth. Meaning innovation is critical for improving citizen’s living standards, as well as being a predictor for economic health and future prosperity. According to the Office for National Statistics (ONS), the construction industry accounts for roughly 6% of the UK’s economic output and employs around 2.3 million people. However, it should be noted that the ONS do not take into account the work of engineers, quantity surveyors, architects, industry-specific manufacturers, builder’s merchants, plant hire or other supporting services. Since their definition does not include these fields, the construction industry’s contribution to the UK’s economy is likely much larger and employs more people than represented in the current statistics. The industry will aid in the recovery of the UK’s economy post-pandemic, making the sector important to people everywhere. Caroline Gumble, Chief Executive Officer of the CIOB, stated: “The quality of our built environment affects every member of society; our work influences productivity and wellbeing at home and at work.  It is both far-reaching and life-shaping.”

innovation for growth

The Process of Innovation

Analyse (SWOT):

Strengths: Strengths of a business beg the question ‘“How can we do more of what is working?”

Weaknesses: Weaknesses are concerned with identifying areas where productivity is low and problems occur often. This allows the business to identify areas where innovation could be of value, for example, inefficiencies, communication problems, or supplier delays. Any areas of concern, places of high cost/waste, continual delays, areas with low return on investment (ROI) or where customers have consistently been dissatisfied.

Opportunities: Opportunities focus on staying up to date with industry developments, new technologies, processes, systems, materials etcetera which grant companies a competitive advantage, can be beneficial or become a strategic industry trend.

Threats: Threats allow an organisation to identify those competitors, advancements or trends that could potentially have a detrimental effect on the business if ignored.

➢Innovate (Experiment):

The next step is to create an answer for areas where productivity may be lacking. Selecting a range of possible solutions and implementing them experientially to find the best fit. The key principle of innovation is communication and listening. Historically innovation has most often derived from individuals with experience in different industries before innovating in their current role. Meaning that having a variety of backgrounds, disciplines and experiences aid innovation so where better to find these individuals than the construction industry. A business’s main source of innovation comes from the information provided by employees, customers, suppliers and the public. Recent graduates often have greater exposure to international developments that could greatly innovate business operations. Most employees deal with problem areas often and have ideas that could improve daily life within the business considerably for themselves and others. Customers are a candid source of information that should not be ignored. To innovate, upper management should openly encourage innovation, collect and implement proposed solutions. For example, younger generations are increasingly tech-savvy and can aid a transition from slow outdated paper-based operations to modern effective planning, communicating, and connectivity solutions. Senior generations, however, have the benefit of years of practical hands-on experience and often know what processes are completely ineffective or time-consuming. They are well versed in health and safety procedures, have the drive to be productive and keep their team safe meaning their suggestions are well informed. The public has also been found to provide information, engage online/offline through groups, competitions, forums etcetera that can often have surprising solutions for a business that has become stuck on a problem. Although none of these improvements will be actioned unless upper management encourages an innovative culture, employee communication and implements these solutions. Once upper management buys in it is staggering how quickly situations can improve.

➢Standardise:

Once the appropriate innovation (solution) has been successfully implemented with beneficial results, the next step is to standardise it across all branches or departments. Adopting the improvement as a standard business practice.

➢Add Value:

Realising the full value of innovation only happens after a brief adjustment period, for example, after employees were familiar with email rather than fax. Employees, suppliers, customers, and shareholders have to adapt to the changes before the full value can be realised. Humans are naturally averse to change but when the value becomes apparent adoption happens quickly. After the innovation has been adopted a further step is to fully capitalise on the innovation by exploring any additional avenues to add value.

➢Never Stagnate (Repeat the Process):

Finally, it is critical for a business to continually work on its productivity, efficiency, and innovation to remain relevant and sustain growth. For example, Blackberry was a world leader in the mobile market but disappeared shortly after their success because they failed to innovate and stagnated.

Corporate Culture

A study conducted for “The Corporate Innovation Imperative,” which surveyed innovation leaders of large companies concluded that the greatest challenge facing business innovation was internal culture. This problem was even greater than the external competitive startups.

The corporate culture of a business is the social-psychological, brand building, tangible and intangible environment through which business operations are conducted. This environment is driven by the values, attitudes, and beliefs of its employees. It symbolizes the unique differentiating personality of an organisation which becomes the brand and expresses its core beliefs, values, ethics, and behaviours to customers as well as shareholders.

Having the correct corporate culture is pivotal to the success of a business. Good corporate culture can cause employees to conduct incremental innovation through their initiative. It also attracts talented candidates and drives the performance of current employees. The modern business environment is driven by consumer demand, customer relationships, and an ever-changing market. Corporate culture is vital for sustainable growth internally and satisfying consumer demands externally.

Research published by Forbes in 2018, showed the direct link between companies with strong cultures and financial profitability. In the UK it is estimated that job turnover in organisations with strong business culture is approximately 13.9%, while turnover in organisations with weak business culture was around 48.4%. With Glassdoor stating the average cost to hire a new employee is about £4,129, and around 42 days to fill the position. Studies by Gallup showcased that engaged teams do increase profitability, over 87% of the world’s workforce is disengaged, though engaged workplaces were 21% more profitable. These studies highlight the benefits of investing time in innovation and corporate culture.

It is vital to understand that recently graduated talent will not have the experience of the previous generation’s workforce but do have the advantage of exposure to cutting edge technological and other advancements in the industry. There is a key exchange between generations that need to be addressed in the construction industry. Experience and guidance flow from senior employees downward while ideas, innovation, and competitive modifications flow upward from new talent acquisitions. When the corporate culture pits generations against each other, senior employees experience the threat of being replaced and junior employees are excluded and resented. This situation is detrimental to the organisation and stunts communication, collaboration and growth. Although inexperienced practically, some ideas and improvements from junior employees can act as innovation injections into the business. While no amount of theoretical training can replace the experience of senior employees. Both are vital and need to collaborate for a successful enterprise. The key to solving this problem is for upper management to encourage innovation and create opportunities for listening to employee feedback from the bottom up. This information from site workers, recent graduates, foremen and managers are critical to the success of the business. There has to be communication and collaboration even for the most basic construction operations to succeed. A construction challenge study found that construction teams often didn’t notify ordering personnel about material shortages to cause delivery delays, gaining respite from work. Solutions began when foremen became involved and aware of the managerial implications this behaviour had as well as the effect on profitability and wages.  This kind of missed communication increases cost to the business and causes project delays. These problems can be avoided with greater communication and collaboration as well as including more frontline workers in managerial thinking. Having employees uninvolved or uneducated about business practices has counterproductive results. Underpinning the need for an innovative mindset and culture.

Conclusion

In conclusion, having a culture of innovation can be highly beneficial to the business and employees alike. It improves the day-to-day operations for employees by making processes more efficient, easier, less time-consuming and more convenient. While benefiting the business by increasing productivity to get more output for the same input. As more teams, individuals, departments, site workers and upper management work towards effective solutions it is easier to solve problems creatively which causes consistent innovation leading to growth. Rather than devoting a lot of resources to creating a department of innovation an innovative workplace results in constant incremental improvements, the flow of ideas and solutions causing a competitive advantage in the market.

Businesses are a few small steps away from massive decreases in cost, increases in profitability and a more competitive enterprise. At Script&Go we are committed to facilitating innovation, and increasing productivity in the construction industry. We support services, activities and communication on all levels from senior to frontline workers. Let Script&Go support your business operations.

 Reference List

Headline photo: Meeting Near a Transparent Glass © Unsplash- Charles Forerunner

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