Denison Organizational Culture Survey: Content Modules Employee Innovation July, 2010
Executive Summary The Denison Innovation Module was created as part of the Denison Organizational Culture Survey: Content Modules. This report includes information on: How Denison Consulting defines employee innovation The relationship between organizational culture and employee innovation Psychometric properties of the Innovation Module Comparison between the March 2010 and updated July 2010 database Employee Innovation While organizational innovation is an extremely broad concept that has been defined in many different ways, at its core, innovation refers to bringing a new idea to use. Although intertwined, creativity and innovation are different processes. Creativity is the production of novel ideas and is a necessary precursor to innovation, but by itself creativity is only half of the equation. To be truly innovative, an organization must also implement those ideas, and further, those implementations should lead to positive outcomes for the organization; they should be successful. Therefore, we define innovation as the successful implementation of creative ideas. Because businesses today are functioning in highly competitive and rapidly changing environments, an organization s ability to innovate is regarded as crucial to its long-term survival. Innovation is important for every organization as it can yield positive business outcomes, such as new products for the marketplace, efficiency, or quality improvements to existing systems and processes. A positive organizational culture is key to facilitating the innovation process, and many of the values and behaviors that promote innovation are captured within the Denison model. Specifically, the Involvement trait measures an organization s ability to build a sense of capability and ownership in employees, which are important to creativity. In addition, organizations that are market and customer focused have a broader source of potential new ideas and are more likely to be successful when implementing new ideas as they will have the market in mind. These concepts are captured in the Adaptability trait of the Denison model along with measuring an organization s ability to create change, which is also a key innovation facilitator. In addition, having clear goals and direction provide a road-map for the challenging journey of translating ideas into products and services. The Mission trait of the Denison model measures the extent to which there is a meaningful long-term direction for the organization; when an organization is focused in a common direction, it is easier to move from idea to implementation. Finally, the Consistency trait of the Denison model also plays a role in innovation as organizations must be able to reach agreement and have systems and processes in place to be able to deliver on creative ideas. 2
While the DOCS measures many of the values and behaviors that are important to facilitating innovation, the Innovation Module focuses specifically on innovation and directly asks questions about creativity, the implementation of creative ideas, and the role that innovation plays in the organization. Asking these questions, along with the DOCS assessment, will allow organizations to see how strengths or weaknesses in their culture are impacting the degree to which they are engaging in the process of innovation. For organizations interested in innovation, the Innovation Module is a great addition to the survey. Scale Reliability Reliability refers to the dependability of a measure. In other words, it indicates the degree to which a measure yields consistent results over time. One of the easiest and most common methods for assessing scale reliability is to calculate Cronbach s alpha, a measure of internal item consistency. Accepted levels of internal consistency are those higher than.70. The reliability for the Involvement Module, as measured by Cronbach s alpha was.94, indicating adequate reliability. Validity Validity refers to the accuracy of a measure, indicating the degree to which an instrument measures what it is supposed to measure. Factor analysis and scale-level correlations were calculated to provide evidence to support the validity of the Innovation module. Correlations between the Innovation module and the twelve indexes and four traits of the DOCS were calculated to assess the degree to which the Innovation module contributes unique information when conducting an organizational culture survey. The Innovation module is expected to retain a one-factor structure. Given that Innovation shares similar concepts to the DOCS (mentioned in Employee Innovation section), moderate to high correlations are expected between Innovation and the DOCS indexes and traits. Results from this factor analysis indicated a one factor solution, meaning that the innovation items measured one, single construct. Correlations at the index level showed that the Involvement factor had high correlations with the DOCS indexes ranging from.73 to.93. The highest correlations were with organizational learning, creating change, and vision. Similar results were found at the Trait level, with correlations ranging from.83 to.94. 3
Table 1. Correlations between Involvement and DOCS Indexes and Traits Index Innovation Empowerment 0.85 Team Orientation 0.85 Capability Development 0.84 Core Values 0.73 Agreement 0.85 Coordination & Integration 0.82 Creating Change 0.89 Customer Focus 0.83 Organizational Learning 0.93 Strategic Direction & Intent 0.77 Goals & Objectives 0.79 Vision 0.87 Trait Innovation Involvement 0.89 Consistency 0.83 Adaptability 0.94 Mission 0.84 Description of the Innovation Module Normative Database Data from 15 organizations were added to the initial database of 52 organizations. The additional data was collected from March 2010 through May 2010. Data from pilot studies are not included in the normative database. This norm update is the first of a series of quarterly updates until the sample of organizations reaches or exceeds 200. Table 2. Description of Normative Benchmark Normative Description Data Range August 2009 through May 2010 Number of Organizations 67 Average Sample Size 116 Total Sample Size (of respondents) 7756 4
Industry and Geographical Breakdowns Denison Consulting uses the North American Industry Classification System (NAICS). To accommodate requests from clients, and to reflect the industry categories in the 2009 DOCS report, the NAICS categories were further divided (specifically, in Manufacturing). The Engagement benchmark includes 15 professional, scientific, and technical service firms, 10 educational services, 8 manufacturing firms, and 7 retail and wholesale trades. A complete breakdown of industry representation in the DOCS database is provided in Figure 1. Geographically, approximately 88% (59) of organizations in the database were headquartered in North America. Other than the United States (55 organizations), other countries include Australia (2), Canada (4), Colombia (2), Israel (1), Malaysia (1), and the United Kingdom (2). On the individual level, 46% of the respondents were from the United States. The second largest representation of respondents was from Colombia (41%) *. Figure 1. Distribution of Organizations. NOTE: Mfg = Manufacturing; Srvcs = Services; Prof/Sci/Tech = Professional, Science, and Technical Services. * Although a large number of individual respondents were from Colombia, they only represent two companies at the organization level. The norms were extracted from the organization level. 5
Percentile Shifts Differences between the March and July benchmarks were also considered by examining the extent to which percentiles obtained by the same organizations differed when evaluated using the two sets of norms. For this comparison, the Innovation item mean scores obtained by the 67 organizations making up the July 2010 benchmark were converted into percentiles twice first using the March 2010 norms and then using the July 2010 norms. The results shown in Table 7 indicate the amount of shift an organization would experience based on their percentile scores from March 2010. Results indicate that there is a general positive shift in percentile points. The biggest positive shift appears at the 50 th percentile, where all items display a positive shift ranging from 1 to 9 percentile points. The one exception is Innovation is a large part of our business activities, an item that displays a negative shift in the 80 th and 95 th percentiles. These major shifts may highlight the high variability within our small sample size. As the sample size continues to grow from regular updates, these shifts should be less pronounced in future analyses. Table 3. Difference in Percentile scores from March to July Mar 2010 July 2010 Difference Innovation Factor 5 6 +1 People are encouraged to be creative. 5 9 +4 We are able to implement new ideas. 5 7 +2 New ideas are continually evaluated and improved 5 7 +2 5 6 +1 Innovation is a large part of our business activities. 5 6 +1 Innovation Factor 20 23 +3 People are encouraged to be creative. 20 25 +5 We are able to implement new ideas. 20 20 0 New ideas are continually evaluated and improved 20 20 0 20 27 +7 Innovation is a large part of our business activities. 20 22 +2 Innovation Factor 50 56 +6 People are encouraged to be creative. 50 57 +1 We are able to implement new ideas. 50 53 +3 New ideas are continually evaluated and improved 50 57 +7 50 59 +9 Innovation is a large part of our business activities. 50 53 +3 6
Table 3 continued. Mar 2010 July 2010 Difference Innovation Factor 80 82 +2 People are encouraged to be creative. 80 83 +3 We are able to implement new ideas. 80 80 0 New ideas are continually evaluated and improved 80 83 +3 80 81 +1 Innovation is a large part of our business activities. 80 79-1 Innovation Factor 95 97 +2 People are encouraged to be creative. 95 97 +2 We are able to implement new ideas. 95 97 +2 New ideas are continually evaluated and improved 95 97 +2 95 97 +2 Innovation is a large part of our business activities. 95 92-3 Figure 2 displays the pattern of shifts of all mean items. Generally, the positive shifts are more pronounced around the 50 th percentile, and they become less pronounced toward the anchors (5 th and 95 th percentiles), with the exception of Innovation is a large part of our business activities, which displays an increasing negative shift at the 80 th and 95 th percentiles. Figure 2. Trend in percentile shifts for all Innovation items and overall rating. NOTE: I1 through I5 refers to the Innovation items sequentially shown in Table 3. 7