Workplace Development as Part of Broad-Based Innovation Policy The case of Bringing the Skills and Competencies of Ordinary Employees in Innovation

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1 Workplace Development as Part of Broad-Based Innovation Policy The case of Bringing the Skills and Competencies of Ordinary Employees in Innovation Tuomo Alasoini Finnish Funding Agency for Technology and Innovation tuomo.alasoini[at]tekes.fi Paper presented at the International HELIX Conference, June 2013, Linköping, Sweden

2 A brief glance at Finnish programme history The first publicly funded programmes to develop productivity and the quality of working life in workplaces began in 1993 and 1996, with the launch of the National Productivity Programme and the Finnish Workplace Development Programme TYKE. TYKE funded 688 projects between 1996 and The programme was evaluated in 2002 by the Social Development Ltd., the Helsinki University of Technology, the University of Tampere and a group of foreign experts. A continuation programme TYKES ( ) funded 1164 projects, covering 2265 enterprises and 3872 workplaces. 207,000 persons participated in the projects. The programme was evaluated in 2010 by Ramboll Finland. About 70% of TYKES-funded projects achieved improvements in work productivity, quality of products and operations, customer service and work flow. More than 50% of the projects brought about improvements in different indicators concerning the quality of working life (QWL). All projects were based on cooperation between management and labour in workplaces. The workplaces that participated in the programmes had a lot of leeway in defining goals and contents of the projects. Some projects also included research, development of development methods and building of larger learning networks.

3 Key characteristics of the Finnish Workplace Development Programme TYKES A government-funded programme ( ) for the promotion of simultaneous improvement in productivity and QWL in Finnish workplaces. Coordinated originally by the Ministry of Labour, later by Tekes, with close involvement by the social partners. Annual budget of about EUR 12 million by the government. Nearly 1,200 projects in virtually all sectors of the economy funded (focus on SMEs and growth-oriented companies). Nearly 90% of the funding used for work input of researchers and consultants in the projects. All projects oriented to practice, research element involved in some projects.

4 Towards broad-based innovation policy since 2008 The Finnish Government assigned in 2007 the Ministry of Trade and Industry to appoint a high-level group with the task of drawing up a proposal for a new national innovation strategy. The group, chaired by former Prime Minister Aho, submitted a proposal for a new kind of broad-based innovation policy. The central idea of the proposal involved further expanding the target of innovation policy to give more significance to non-technological innovations and increasing the positive joint impacts of technological and non-technological innovations. The proposal also placed greater emphasis on the role of customers, users, ordinary employees and communities of different kinds in innovation. The Government approved the central recommendations of the strategy proposal in October DM

5 Basic strategic choices of Finland s new broad-based innovation strategy (Proposal for Finland s National Innovation Strategy, 2008) Innovation activity in a world without borders: In order to join, and position itself within, global competence and value networks, Finland must actively participate and exert influence and be internationally mobile and attractive. Demand and user orientation: Innovation steered by demand requires a market with incentives and shared innovation processes between users and developers. Innovative individuals and communities: Individuals and close innovation communities play a key role in innovation processes. The ability of individuals and entrepreneurs to innovate, and the presence of incentives, are critical success factors of the future. Systemic approach: Exploitation of the results of innovation activities also requires broad-based development activities aiming at renewal and determined management of change.

6 Workplace innovation and development within the broadbased innovation strategy (Government s Innovation Policy Report to the Parliament, 2008) The perspective of working life development will be included as part of innovation activity financing, and the development of expert services and a broad-based innovation policy. Special financial incentives will be increased for research, development and innovation activities that support the reforms of organizational environments, taking new forms of work into consideration. New methods for spreading innovations that develop working life will be developed extensively for the use of enterprises and other communities. The quality of working life emerges as one of the critical factors of the innovation environment, with a direct influence on the efficiency, productivity and quality of operations. Innovation activity, like other competence-based high added value tasks, is based on the employees and working communities enthusiasm, commitment and enjoyment of work.

7 Shift of policy context in workplace development In 2008, implementation of the TYKES programme was transferred from the Ministry of Labour to Tekes as part of the adoption of a new national innovation strategy for Finland. The strategy was based on the idea that the focus of innovation policy should be shifted increasingly to demand and user-driven innovations and the promotion of non-technological innovations, including also workplace innovations. The task of Tekes was expanded to cover innovative research and development of working life as well, and increasing productivity and the quality of working life were included in the goals of its operations.

8 Funding of working life research and the development of work organisation in Tekes Since the beginning of 2010, Tekes has funded a total of 224 work organisation development projects and 275 R&D projects where the development of the work organisation was integrated with the development of products, services or business operations (by 6 June 2013). The level of funding for working life research and the development of work organisation has been on average EUR 14 million annually. Companies and work organisations of all kinds are eligible for funding; the focus, however, is clearly on small and medium-sized enterprises which show high development and innovation potential.

9 The Tekes Liideri programme ( ) in a nutshell Liideri was prepared between October 2011 and June 2012, in close cooperation with researchers, developers, workplaces, labour market organisations and policy makers. Liideri is a Finnish twist of an English word Leader, referring here to a forerunner. Liideri is a programme for the development of business, in which companies renew their operations through developing management and forms of working and actively utilising skills and competencies of their personnel. The purpose of Liideri is to be a next-generation workplace development programme that represents an approach in keeping with a broad-based innovation policy at the project level, an interconnecting link between traditional objectives and targets in the development of working life, such as work productivity, QWL and well-being at work, and a link between them and corresponding objectives and targets in traditional innovation policy, such as renewals of products, services and business models.

10 Purpose and policy context of the Liideri programme The programme produces management and organisation practices, which renew business activities and working life, as part of a broader national working life development strategy, coordinated by the Ministry of Employment and the Economy. According to the vision of the strategy, Finland will have the best working life in Europe in From the perspective of the programme s own vision, this means that Finland is characterized by highly productive workplaces, which bring about joy at work.

11 Three focus areas Management 2.0 refers to management principles, processes and practices, which help an organisation to promote initiative, creativity and innovation potential of personnel, with a view to achieving competitive edge based on them. Employee-driven innovation refers to active and systematic participation of employees in ideation, innovating and renewing of products and services and ways of producing them, with a view to creating new solutions that add value to customers New ways of working refer to work, which transcend the boundaries of time-honoured temporal, spatial and organisational patterns and forms of work OR which in some other recognised way embody principles of management 2.0.

12 Focus area employee-driven innovation (EDI) in Liideri EDI can be divided into (Institutionalised) Employee-involving innovation: solutions, which are based on development by ordinary employees, but based on commissions by management, customers or stakeholder groups of different kinds. (Fully) Employee-driven innovation: solutions, which are based on development by ordinary employees and recognised by management and in which the initiative originally arises from ideation by employees themselves. (Continuous) Self-organised remaking of jobs and activities: creative solutions, which are designed and implemented by ordinary employees, with a view to helping them solve problems related to their daily work in a profitable manner from the point of view of the entire work organisation. EDI is here a much broader concept than direct participation aimed at one s own work duties and work environment or continuous improvement taking place within limits specified by the management and aimed at incremental innovations. The programme supports research, development and dissemination of information on management processes and forms of work organisation and working, which promote EDI in Finnish workplaces.

13 Employees role in development and innovation: comparison of different approaches Innovation type that is the object Central approach to innovations Underlying management rhetoric Key property promoting innovation in the organisation Lean thinking High-involvement innovation HII Mainly incremental Mainly incremental Increasingly radical as innovation capability develops Production management Employee-driven innovation EDI Incremental and radical Practice-based innovation PBI (DUI/Mode 2b) Mainly incremental Learning theories Learning theories Innovation research Organisational culture Rational Mainly rational Rationalnormative Standardised operational processes Organisational innovation capability comprising eight key abilities Enabling management Normative Interaction and cooperation within the organisation Conceptual degree of explicitness A group of principles and generally applied techniques Explicit framework Broad umbrella Broad umbrella

14 Why is employee-driven innovation an issue for Tekes? Innovations are becoming an increasingly important source of competitive edge to Finnish companies in the globalising economy. In the future, a growing number of innovations will be intangible and service-oriented. In generating innovations of this kind, knowing the wishes, expectations and needs of users and customers will become increasingly important. As a result, the group of innovation actors will grow and become more versatile.

15 Increasing importance of employees role in innovation owing to three reasons The market will change at a faster pace: Market changes will take place faster and they will become more difficult to predict. Being able to react to changes rapidly requires continuous feedback from customers and users. Employees working at the customer interface have an important role in producing this information. The economy will become networked: Due to networking and outsourcing, producing innovations will be increasingly spread out within the business field from big corporations to smaller businesses which do not have the same kind of specialised R&D personnel as larger companies. They have to innovate by encouraging their ordinary employees to participate on a broad front. The skills and competencies of employees will improve: The general level of education and know-how of employees in industrial countries has improved and companies employ more and more people with the ability to see larger entities and participate in solving even complex problems. Many employees already perform knowledge-intensive work that essentially includes problem-solving.

16 The rationale of employee participation in different policy discourses Forms of participation Typical objects of participation Rationale of participation Industrial relationsbased workplace development policy Direct and representative participation Work tasks, work organisation and working conditions Employees have the right to participate through delegation, consultation, hearing or having access to relevant information. Collaboration between management and employees improves the quality and novelty value of new solutions. Science and technologyoriented innovation policy Direct and representative participation New products and processes Participation helps - overcome employee resistance to the adoption of new solutions. - adapt solutions, developed jointly by management and experts, to better suit local conditions by giving employees an opportunity to implement small adjustments. Broad-based innovation policy Employee-driven innovation New products, services, processes, business models, work organisation, etc. Participation - is a key success factor in complex environments where networking, fast renewal and innovation are central competitive factors. - generates collective learning and reinforces a sense of inclusiveness among employees in connection with rapid changes.

17 Liideri programme s conceptual framework for promoting employee-driven innovation Management principles Management processes Organisation of work Infrastructure of work Employee-driven innovation Ideation Innovating Value creation Operational performance Well-being at work Values and culture that support employees participation in innovation

18 Organisational forms promoting employee-driven innovation Line organisation Operational teams, responsible for development and innovation also Development organisation Cross-functional development groups Idea workshops based on broad participation of employees Change agent networks Cross-organisational networks Cross-organisational development, innovation and learning networks Interactive virtual forums (incl. social media)

19 Various impacts of employee-driven innovation Operational performance Well-being at work Direct effects Improvements and renewals in products and services and in ways of producing them Increased employee-friendly solutions in products and services and in ways of producing them Indirect effects Broad-based organisational learning Increased experience of inclusiveness in change situations among employees

20 Conclusions: what s new in EDI? In relation to traditional industrial relations-based workplace development, EDI includes a new rationale regarding employees participation and a new process-like view of QWL. From the viewpoint of traditional technology-oriented innovation activities, EDI means expanding the group of relevant innovation actors and detachment from the concept of a narrow, institutioncentred innovation system.

21 Conclusions: employee-driven innovation does not equal incremental innovation There is no reason to limit the scope of employee-driven innovation to incremental improvements. Also radical innovations are often employee-driven. They derive from doing something unique, valuable and difficult to imitate or plan in detail through standard management procedures.

22 Conclusions: there is a need for reforming management As a concept, EDI is not as management or organisation-driven as some of its parallel concepts. However, this does not mean that it has no need for strong management support. On the contrary, the credibility and long-term nature of the support require management principles that recognise and acknowledge the role of ordinary employees as active and legitimate subjects in conjunction with change. Extending the reform to the principles of management is often necessary, because internal knowledge and in particular knowledge that derives from lower levels of hierarchy, i.e. the shopfloor level and ordinary employees has in many organisations been traditionally undervalued in comparison with knowledge obtained from external sources.

23 Conclusions: management reform is not easy It would be naïve to assume that employee-driven innovation activities and the innovation democracy or innovation mainstreaming that can, at best, be achieved through such activities would be simple to implement. The technical component of management in the form of management skills, styles, practices, tools, etc. is closely interwoven with the more ideological component deriving from the hierarchical power and ownership structures inherent in capitalist market economies. A fundamental reform in management thinking towards broad participation of employees in innovation, for example, is not a matter of pure technical rationality, but a matter which in many ways touches upon the underlying power and authority relations within companies.

24 Conclusions: employee-driven innovation is not a silver bullet in improving QWL Without sufficient planning and managerial and organisational know-how, attempts to promote EDI can lead to new problems in well-being at work as well. For example work load will increase if innovating is mainly experienced as an extra duty. employees will become frustrated if the time used for innovating and the work contribution do not lead to visible results. feelings of inequality will become more common among employees if they feel that the resources, results or effects of innovating are not distributed equally. tensions and conflicts within the work community will increase and cooperation will deteriorate if innovating is not seen as a communal process.

25 Conclusions: broad-based innovation policy calls for rethinking employee contribution Broad-based innovation policy does not refer only to a linear expansion of the traditional innovation policy area to some new areas. For example, integrating employee-driven innovation activities into the new concept of innovation policy will also create radically new types of question-setting. Responding to them will require a new kind of understanding and competence at the policy level and open-minded rethinking of management processes at the company level.

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