This part of the auditing process reviews how effectively the organization is able to deliver the level of innovation necessary to create new products, new services, and new ways of undertaking activities. Success in these activities is likely to depend on the company successfully harnessing the latent creativity in individuals at all levels in the organization. The innovation audit examines whether the necessary assets and competencies are present and examines four key areas:
The organizational climate
There are two components to the audit of the organization’s climate: an attitude survey, and the technique of metaphorical description.
An attitude survey of key areas of the organizational climate that affect creativity
The aim of this component of the audit is to discover the current feelings of staff about the organizational climate. There are eight influential factors that are crucial in supporting innovation and four areas that act as constraints (Burn side, 1990). Support for creativity and innovation include:
Factors that act as constraints on innovation in an organization include:
Two other areas should be included in the audit of the staff’s perceptions on organizational climate:
This audit is about innovation and it should therefore use proven creativity tools as part of the process; the second part of the evaluation of the organizational climate therefore uses the technique of metaphorical description (Morgan, 1993).The power of the metaphor approach is that it can overcome the limitations of literal language and describe far more complex relationships and connections. Individuals are asked to describe their organization in terms of a metaphor. For example: ‘This organization is like a well-oiled machine.
It runs well and doesn't’t make too much noise’, or‘This organization is like a supertanker – it takes a long time to change direction’. These metaphors can then be analysed. They are likely to be either positive or negative observations based around seven organizational practices:
This method allows a more rounded perspective of the organizational climate to emerge.
Hard measures :
There is a range of hard measures that can be reviewed to establish the current organizational performance in the areas of creativity and innovation:
Product and service innovation performance measures
Research undertaken on a hundred new business launches (Kim andMauborgne, 1998) discovered that 86 per cent of them were standard market value (me-too) launches, or only offered incremental improvements. These businesses only generated 62 per cent of launch revenues and 39 per cent of profits. The remaining 14 percent of launches were businesses that created markets or recreated markets that were already in existence. These ‘pioneering’ businesses,although only 14 per cent of the sample, generated 38 per cent of revenues and massive 61 per cent of profits. The clear implication of this study is that organizations that are driven by future profitability need to have a spread of business across the portfolio. Companies that find the majority of their businesses or products are in the settler area are paying insufficient attention to the innovation process.
The organization’s policies and practices that are currently used to support innovation
This review consists of identifying current policies that may be in place to support innovation. It would also review whether any structures or procedures have already been developed to try and facilitate creativity and innovation.
The innovation/value matrix
The balance of the cognitive styles of the senior management team
The final part of the innovation audit is to evaluate the cognitive preference and behaviours of the management team. Although individuals have the capacity to make use of all their cognitive functions, one area tends to dominate. The four cognitive preferences are shown in Figure below.
It is important to have a mix of cognitive styles in the senior management team that will influence the business’s orientation towards creativity and innovation. Researchers have hypothesized the likely influence of a range of senior management teams’ potential cognitive profiles as illustrated in Figure below.
The senior management’s cognitive composition and its likely relationship to business strategy
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