Design of Corporate Creativity
Authors: Khandwalla Pradip N , Mehta Kandarp 
Published: August 2016

Globalization has created immense competitive pressures on corporates. In order to survive and prosper, organizations in the Third World need to redesign themselves for corporate creativity, i.e., for high rates of sustained and successful technological as well as non-technological innovations. This paper provides several examples of how deregulation of the West's airlines industry in the decade of the 1980s stimulated its corporate creativity. It then reviews the literature on the organizational design for corporate creativity to derive a model of the corporate's organizational design requirements for copious and successful innovations. The model proposes that, for superior corporate creativity in a regime of intensifying environmental pressures, the organization needs to choose the following: i) innovation-friendly business strategies; ii) organizational structure; iii) top management style; iv) middle management practices; and v) effective modes of managing innovations. These choices would lead to innovational success, which, in turn, would confer competitive excellence on the organization.

This paper reports a test of the model through questionnaire-based data on 65 Indian corporates collected from late 1999 to early 2003. Data were gathered from an average of five top and senior level executives from each corporate on 6-point scales, and each scale was anchored by a statement at each extreme. All the responses from each organization were averaged for each rated scale and converted into a percentage score for the organization. The scales were grouped for aggregation into: i) environmental pressure; ii) innovations-supportive strategic management; iii) innovations-supportive top management style; iv) innovations-supportive organizational structure; v) innovations- supportive managerial practices and culture; vi) effective management of innovations; vii) corporate innovational success; and viii) corporate competitive excellence.

The data were secured for the situation ‘now’ and three years earlier and this enabled the computing of changes in each study variable. The data indicated that change in effective mangement of innovations was the strongest predictor of change in innovational success which, in turn, was the greatest predictor of change in competitive corporate excellence. In order to identify the major strategic choices in the face of high versus low environmental pressure, cluster analysis was performed on the data from the 30 highest scoring corporates on environmental pressure and the 30 lowest scoring corporates on environmental pressure. It revealed that, regardless of environmental pressure, organizations that chose to adopt an organizational design compatible with high corporate creativity outscored those organizations that did not choose such a design in terms of both innovational success and competitive excellence.

The data also indicated that organizational design for corporate creativity may yield far better performance when change in environmental pressure is modest than when it is large. The reason may lie in differential rates of the diffusion of innovations in high versus low pressure environments. High pressure environments may induce a more rapid diffusion of innovations. The faster the institution-alization of innovations in an industry, the lower, or less durable, may be the competitive advantage conferred on the innovating organization. This paper strongly recommends the following: Managers should redesign their organizations for higher corporate creativity. The core curriculum of MBA programmes needs to incorporate values, competencies, and management concepts that can nurture organizational creativity.

Specifically, this paper provides suggestions to practising managers for enhancing corporate creativity which are as follows: Conduct a diagnosis of the design of your organization and identify the items where the gaps with the model are large. Form a cross-functional team to tackle each major gap area. Review the recommendations of the team and identify action points for implementation. Institutionalize a culture of brainstorming for novel and effective solutions and a number of specific innovation-friendly practices.